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Growing demand for industrial buildings?

8th May 2014

The country, as we are all too aware, has been through some tough times and none more so than the industrial sector, where many years of decline have been exacerbated by the economic downturn. There are some indications however that industrial output may be improving, which make good news for those of us supplying buildings and warehouses to help with any expansion.

Forecasts for the future

In 2013 industrial output declined by 7.6% which is surprising given the other overall growth figures for that period. The problem was there was over supply in the market which reduced the capacity for growth, but in 2014 it is anticipated that there should be growth of 10.5%. Factory output is expected to rise by 6.0% in 2014 due to the domestic economic recovery as well as improvements in the wider global economy which has led to more exports particularly to the faster growing economies. There has been an excess of supply of warehouse space in recent years but with the recovering demand it is anticipated that there will be a growth of 20% in this sector in 2014. There are more details on the Construction Products Association website.

This is all great news, although percentages year on year can disguise the fact that we are starting from a low base and it will take time to recover to the pre-crash levels. However, indicators show that as the economy expands there will be a requirement for more infrastructure including buildings.

What will happen next?

This is all good news for the construction sector with the economic indicators on the rise and more buildings and floor space required. The difficulty comes when trying to apply this future prediction of growth into budgets and plans at a company level. Growth may be happening, but where is it and which bits of the economy are looking to invest capital to expand.

The problem with forecasts is that they are just that, forecasts. They cannot take account of any unknowable event like the Eurozone crisis reappearing or a change in government policy affecting growth predictions. This makes life difficult for anyone looking to plan an expansion with certainty, as finding new premises or expanding existing buildings is both a time consuming and expensive project. Furthermore if, for whatever reason, there is a flaw in the economic forecasts there is a potential for the time and money to be wasted.

Expanding industrial space on a budget

Operating space can be a difficulty for businesses, too much and it’s a waste not enough and it’s a problem. There is no doubt that the economic indicators are showing a positive improvement, but can we effectively put our money on it? One way of hedging our bets on any expansion plans is to consider a temporary building to use in addition to an existing building or even as a replacement. Needing only level hard standing to be built on, they can be ready and operational in a matter of days. Available to buy or hire there is greater financial as well as operational flexibility.

The demands of capital when looking to expand are significant and it is good practice to consider all options when forward planning. If you have any tips on future planning, I would be interested to hear them.

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