Construction Trends Forecast

When the World Health Organisation declared the Colvid-19 outbreak a pandemic on March 11th 2020 it was only a matter of time before stringent lockdowns would come into force throughout the world. In the UK it happened less than two weeks later and the economy virtually ground to a halt. People stayed at home and the roads fell silent. While ecommerce benefited enormously, most industries had to suspend or massively downscale their operations.

The construction industry was hit very badly, with work pausing on building sites for two months or more. There was no practical way of pursuing building projects while complying with the restrictions introduced to stop the spread of the virus. Initial predictions of the long-term consequences for the industry were bleak.

However, once the economy partially reopened, construction proved itself to be not only resilient but also highly inventive in adapting to changed circumstances. The second half of 2020 saw a significant recovery as existing work resumed and new projects were added to order books. The trend continued and the number of starts in 2021 is valued at £54.2 billion, which is an 11% increase on 2020.

Industry forecasts are universally positive with growth expected to be up by 7% during 2022 and a further 5% by the end of 2023. What is particularly encouraging is that the recovery is taking place in the public and private spheres at the same time. Public investment is a major driver and the funding commitments made in the government's Spending Review suggest an increase in spending on health and civil engineering in addition to ongoing infrastructure work.

However, the private sector is also making a significant contribution with several major logistics and industrial projects, private housing and schemes in the hotel and leisure sectors. The confidence of private investors is thanks in no small part to the government's own investment plans.

One market segment that suffered a sharp decline during the various lockdowns was office starts. Both refurbishments and new developments were hit, while changes in working practices to hybrid or remote solutions posed a serious threat to the future. In fact, from January to October 2021 office starts increased by 26% and rather than changes in behaviour weakening the sector they are simply enabling it to adapt to a new normal.

Supply-side constraints have caused difficulties with the availability and cost of material rising rapidly since 2020, but these are forecast to ease off by the end of 2022. The main challenge to the long-term recovery of the industry is not the lack of investment in infrastructure, logistics and industrial projects but the shortage of labour. Upward pressure on wages caused by this shortage is one factor and staff mobility is another, with the most highly skilled workers being attracted by the best salaries. Some estimates say the industry is understaffed by 22% with the average time needed for hiring essential personnel commonly stretching to nearly four months.

Construction businesses need to implement hiring strategies today that will give them access to the labour they'll need to equip their workforces for the recovery. If other supply-side problems resolve themselves, then firms will be seriously disadvantaged if their staffing levels remain insufficient. At BuildSpace our advice to our clients is simple: take action now because tomorrow it might be too late. Remaining competitive demands a proactive approach to hiring.

On our site we have published a series of blogs addressing the difficulties that affect the construction labour market and suggesting the most effective measures to overcome them. You can read them here [LINK]. Our industry is defying the early warnings and staging an impressive recovery. Make sure you're ready and able to participate.