{"id":79331,"date":"2020-07-15T10:41:37","date_gmt":"2020-07-15T09:41:37","guid":{"rendered":"https:\/\/www.pbctoday.co.uk\/news\/?p=79331"},"modified":"2020-07-15T10:41:37","modified_gmt":"2020-07-15T09:41:37","slug":"offsite-construction-growth","status":"publish","type":"post","link":"https:\/\/www.pbctoday.co.uk\/news\/mmc-news\/offsite-construction-growth\/79331\/","title":{"rendered":"The outlook for modular and offsite post-Covid"},"content":{"rendered":"

Studies by AMA Research<\/a> have pinpointed the sectors that will experience an upturn from the Covid-19 pandemic, with both modular and offsite construction set to grow<\/h2>\n

The impact of Covid-19<\/a> on the economy is still highly uncertain. Several economic forecasters have put a wide range of predictions in the public realm. Most assumed a deep contraction in Q2 2020 of from 5% up to as much as 35% followed by a rapid recovery and a return to near previous levels of output by the end of 2020. Almost every part of the economy has been impacted in some part by the global pandemic.<\/p>\n

AMA Research has been following the goings-on throughout lockdown and now into the easing. Among the gloom, we\u2019re seeing there may in fact be several sectors that will see an upturn following on from the pandemic and assisting the UK find its \u201cnew normal<\/a>\u201d.<\/p>\n

Prefabricated volumetric building systems<\/h3>\n

Prefabricated volumetric building<\/a> systems is one such sector. Permanent volumetric building systems were estimated to account for around 40-45% of total market by value at MSP. Would the addition of current social distancing measures only increase this? The ability to turn up on site with a structure almost entirely ready to go can only help when keeping workers apart.<\/p>\n

\"offsite<\/p>\n

The biggest market for volumetric products is temporary accommodation on construction and industrial sites and event hire, which is worth around \u00a3350m-\u00a3380m annually. Though events are down, some short-term demand from the health and possibly the grocery sector to expand consumer capacity through the pandemic timeline may also be in demand. Growth may also come from some bounce back for the construction sector after the restrictions are lifted and longer-term, the outlook for the volumetric sector is positive.<\/p>\n

It is forecast that the market will grow by 14% between 2020 and 2024. This is down to an increasing number of public sector procurement frameworks that include several key modular building contractors, and an increasing use of Building Information Modelling. More importantly, there is now a strong likelihood of an increase in the use of volumetric and other types of offsite construction methods to help meet the chronic housing shortage and cope with the lack of traditional construction skills<\/a> within the industry. By 2024, the housing sector is expected to account for 12%-14% of market value, up from 9%-11% in 2019.<\/p>\n

Hayley Thornley, the editor of the Prefabricated Volumetric Building Systems Market Report, said: \u201cThe outlook for the volumetric building systems market remains difficult to predict given the lack of published data in this sector and the continued uncertainty, not only the construction sector but also the wider UK economy. Steady growth in this market is expected over the next few years to 2024, underpinned by the increasing use of offsite construction methods to help meet the chronic housing shortage and cope with the lack of traditional construction skills.\u201d<\/p>\n

Offsite housing construction<\/h3>\n

All methods of offsite housing<\/a> construction look set to grow in a post-pandemic world. Demand will be driven by several factors: the ongoing shortage of homes across England, which has certainly had a pause put on through the pandemic and lockdown. The declining numbers of key skilled tradesmen and professionals, which in turn increases demand in offsite housing manufacturing and output capacity. This is assisted by the number of systems with quality assurance.<\/p>\n

Key areas of demand are likely to be where there is an urgency to increase the rate of completions \u2013 eg affordable housing \u2013 and where offsite methods are particularly well suited, eg Build-to-Rent. This could almost certainly be a consideration as demand increases as lockdown eases.<\/p>\n

Other than timber frame<\/a>, the use of other offsite technologies for housing has been limited. From 2019, however, demand for and supply of volumetric and closed panel systems should grow. There are a number of big-name key players in this sector including Legal & General, Laing O\u2019 Rourke and Urban Splash.<\/p>\n

There are also new superstructure materials being brought to market, eg autoclaved aerated concrete (AAC) and composite material, such as Tufeco, a monolithic panelised system of polymer concrete derived from silica extracted from glass recyclate. A core driver underpinning growth is the significant increase in third party investment, eg from Goldman Sachs, leading Japanese offsite housing manufacturer Sekisui House and housing developers such as Barratt Homes and Berkeley Group.<\/p>\n

Warehouse and storage sector<\/h3>\n

Our third area to watch for growth is the warehouse and storage sector. Previously, demand for warehousing floorspace across all regions has been strong, with take-up rising by 25% in 2018. After years of decline, confidence has now returned to the warehouse sector, which is set to become a long-term growth area, driven by a change in consumer habits and the structural shift in consumer spending to online; a habit that has only increased since the Covid-19 pandemic hit the UK.<\/p>\n

\"offsite<\/h3>\n

Contractors\u2019 output in the warehouse market was estimated to have risen by 10% in 2018. AMA Research predicted this growth and sees further growth with the industrial sector as things get back on track through 2021. Warehousing provides a potentially quick restart for the sector given the relatively short timespans of most warehousing construction projects.<\/p>\n

Demand for well-located, high-quality warehouse space remains strong as retailers, web shops and third-party logistics operators respond to the growing e-commerce sector. The demand for \u2018mid box\u2019 units (50,000 sq ft to 99,999 sq ft) remained popular in 2018; however, it is yet to be seen whether the square footage demand increases with more business being done online. Pre-Covid, there was a resumption of speculative development, weighted towards the East and West Midlands and South East, areas that are still well positioned for growth post-Covid.<\/p>\n

Data centre construction<\/h3>\n

Responding too to increased online activity, since 2015, the data centre construction market has grown from around \u00a31bn at installed values to \u00a31.24bn in 2019. This is largely underpinned by high levels of take-up in the co-location sector. Although overall growth rates have been constrained by declining levels of investment in public sector data centres, the government\u2019s long-term cloud-first policy favours outsourcing to wholesale and co-location providers in order to reduce expenditure on operating its own data centres.<\/p>\n

\"offsite<\/h3>\n

The impact of the Covid-19 outbreak is expected to severely hamper growth in data centre construction output in 2020. However, once the epidemic is over, strong growth will resume, underpinned by the underlying factors driving up greater IT and internet use.<\/p>\n

London and the M25 region remains the largest data centre cluster, although recently there has been rapid growth elsewhere, with new clusters in Wiltshire, Leicestershire, South Wales and Cambridgeshire. Manchester and Scotland are also becoming more established data centre markets. This has been driven by a combination of lower costs compared with the M25 region and improvements in technology.<\/p>\n

The data centre contracting market is very fragmented. While most large M&E contracting businesses are key players, companies involved in data centre construction range from major building contracting groups and commercial developers to data centre specialists and operators, modular building manufacturers and IT equipment suppliers.<\/p>\n

Throughout the pandemic and lockdown AMA Research has been tracking the economy and construction sectors. Our reports are updated to reflect the changes brought by Covid-19 and its specific impact within particular sectors.<\/p>\n

Thankfully, it has not been all doom and gloom and we can see an uplift for several sectors as restrictions ease and businesses are able to continue with output. It is especially worth noting that the sectors that are able to access offsite construction<\/a>, data storage or warehousing will more than likely be in demand in the short to medium term. It will as always be interesting to see where this takes the UK economy and how this will affect the way in which the UK populous live and work in the years to come.<\/p>\n

 <\/p>\n

 <\/p>\n

Lesley-May Baker<\/strong><\/p>\n

Marketing executive<\/p>\n

AMA Research<\/p>\n

www.amaresearch.co.uk<\/a><\/p>\n

Twitter: @AMAResearch<\/a><\/p>\n

LinkedIn: AMA Research ltd<\/a><\/p>\n

Facebook: AMAResearchLtd<\/a><\/p>\n

Instagram: @ama_research<\/a><\/p>\n

\n<\/div>","protected":false},"excerpt":{"rendered":"

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When she\u2019s not working hard on cranking out first-class content for our online viewers to enjoy, she\u2019s keeping our social media lively and up to date\u2026 you could call her a social media guru? We\u2019re sure she\u2019d like that. With a BA in English and Journalism, Steph isn\u2019t fazed by attention to detail; on the contrary, she enjoys getting her teeth into a good article. In her downtime Steph loves nothing more than getting together with friends to enjoy a few (several) gin and tonics. Think you\u2019ve got some content Steph would be interested in? You can contact her either by phone on (01270) 502876 or by email at sblundell@pbctoday.co.uk","sameAs":["https:\/\/www.pbctoday.co.uk","https:\/\/www.linkedin.com\/in\/steph-blundell\/","https:\/\/x.com\/https:\/\/twitter.com\/Steph_PBCToday"],"url":"https:\/\/www.pbctoday.co.uk\/news\/author\/stephblundell\/"}]}},"publishpress_future_action":{"enabled":false,"date":"2026-10-12 17:17:18","action":"change-status","newStatus":"draft","terms":[],"taxonomy":"category","extraData":[]},"publishpress_future_workflow_manual_trigger":{"enabledWorkflows":[]},"_links":{"self":[{"href":"https:\/\/www.pbctoday.co.uk\/news\/wp-json\/wp\/v2\/posts\/79331","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.pbctoday.co.uk\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.pbctoday.co.uk\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.pbctoday.co.uk\/news\/wp-json\/wp\/v2\/users\/16"}],"replies":[{"embeddable":true,"href":"https:\/\/www.pbctoday.co.uk\/news\/wp-json\/wp\/v2\/comments?post=79331"}],"version-history":[{"count":0,"href":"https:\/\/www.pbctoday.co.uk\/news\/wp-json\/wp\/v2\/posts\/79331\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.pbctoday.co.uk\/news\/wp-json\/wp\/v2\/media?parent=79331"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.pbctoday.co.uk\/news\/wp-json\/wp\/v2\/categories?post=79331"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.pbctoday.co.uk\/news\/wp-json\/wp\/v2\/tags?post=79331"},{"taxonomy":"stakeholder_rel_tag","embeddable":true,"href":"https:\/\/www.pbctoday.co.uk\/news\/wp-json\/wp\/v2\/stakeholder_rel_tag?post=79331"},{"taxonomy":"contributor_rel_tag","embeddable":true,"href":"https:\/\/www.pbctoday.co.uk\/news\/wp-json\/wp\/v2\/contributor_rel_tag?post=79331"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}