Deloitte Crane Survey: Manchester construction boosted by residential development as new starts decrease

• A total of 4,448 new homes were completed and 10,788 homes were under construction in 2024
• 20 new construction projects broke ground in 2024, the lowest level in 10 years
• 1.07m sq. ft. of office space was delivered to market in 2024, the highest level since 2020
• 744,378 sq. ft. of new retail and leisure floorspace has been delivered since 2019 with a further 213,000 sq. ft. set to be delivered in the next three years
• 258 hotel rooms were delivered to market in 2024, with a further 1,181 set to complete construction in the next three years

Construction activity remained resilient in Manchester and Salford in 2024, with 58 projects on-site, according to Deloitte’s annual Manchester Crane Survey. Completions also increased in 2024, with 27 developments delivered, a significant increase on 2023. The residential sector continued to dominate construction activity across the city region.

Despite this strong performance, 2024 was the third year in a row for decreased new construction starts in Manchester, with 20 new projects brought to site, compared to 21 in 2023. This was below the ten-year average of 28 and the lowest number since 2014.

John Cooper, infrastructure and real estate partner at Deloitte, said: “You only need to look at the skyline in Manchester to see just how much the city has changed over the last decade, as it has transformed it into a dynamic innovation hub. Our survey’s findings demonstrate that despite ongoing pressures and a decrease in new starts, Manchester’s construction sector remains active and is very well placed for further development over the next few years.”

Now in its 25^th year, the Manchester Crane Survey monitors construction activity across a range of sectors including offices, residential, hotels, retail, and education, providing a barometer of developer sentiment and future supply. Across all surveys – Belfast, Birmingham, Leeds and Manchester – 47 new construction starts were recorded in 2024, with a total of 130 schemes currently on site.

 Residential and student residential 

Despite inflationary pressures, the residential market remained strong in 2024. Across Manchester and Salford, 4,448 homes completed construction in 2024, with an additional 11 new residential schemes starting on-site, which are expected to add an additional 2,410 homes to market. With a total of 10,788 homes under construction, the projected completions are on track to meet Greater Manchester’s average annual target for residential delivery in Manchester for the next two years.

The student residential market also delivered a strong year of activity. While no student schemes completed construction in 2024, the pipeline remains strong with 2,687 bedspaces under construction and further activity expected in the coming years in light of recent planning permissions.

Cooper, said: “Despite economic headwinds and political uncertainty shaping much of 2024, the residential market in Manchester continues to deliver strong results.

“The city’s commitment to addressing housing needs and the projected completions of approximately 9,000 new homes over the next two years means Manchester is on track to exceed the average annual demand for homes, identified  in Greater Manchester policy.”

“With Manchester’s leading higher education institutions also bringing in thousands of students every year, the city’s student residential sector is continuing to deliver more bedspaces, with a number of new permissions granted to ensure growing student demands can be met.”

Office, research and education

While it was another strong year for office completions in 2024, activity was dominated by refurbishments and extensions, as opposed to new build offices. Despite robust occupier demand for large-scale, modern, adaptable and sustainable offices, headline rents have been unable to keep pace with construction inflation, pushing refurbishment activity.

In 2024, 1.07m sq. ft. of office space was delivered, reaching its highest level since 2020. Of the six schemes commencing construction last year, five were either refurbishments or extensions of existing office space. However, these new schemes are proving smaller in scale, set to only add c.400,000 sq. ft. of new floorspace when complete. This is comparatively lower to 2022, when five new starts added 1.1m sq. ft. of new floorspace.

Construction activity in the education sector was more subdued with no new schemes starting on-site in 2024. However, the delivery of 306,000 sq. ft. of new floorspace at Manchester Metropolitan University’s Science and Engineering Building added a further boost to the education offer in the Oxford Road Corridor.

Cooper added: “The shift to hybrid working patterns has created an opportunity to deliver high-quality office space that prioritises collaboration and sustainability. Manchester has certainly embraced this trend whilst seeing a shift towards refurbished offices which represents 68% of the total floorspace under construction in 2024. The pipeline of activity is strong, ensuring Manchester remains at the forefront of hybrid, sustainable office spaces that cater to changing working dynamics.”

Retail, leisure and hotel

Manchester and Salford continue to be world-class tourist destinations, boosted by their vibrant 24-hour cultural scene across music, arts, sport, and nightlife. Manchester’s city centre and surrounding areas have continued to flourish with 744,378 sq. ft. of new retail and leisure floorspace being delivered since 2019. A further 213,000 sq. ft. is set to be delivered in the next three years, predominantly integrating into mixed use developments.

The recent opening of Factory International at Aviva Studios, followed by Co-op Live Arena in 2024 significantly boosted Manchester’s thriving tourism economy, bouncing back since the pandemic. This now means that Greater Manchester’s tourism sector is valued at £8.7 billion.

In 2024, 258 hotel beds were also delivered to market across two schemes, with a further 1,181 rooms set to complete construction in the next three years. This comes as hotel occupancy rates have continued to rise to a high of 75%, despite c.3,000 hotel beds being delivered over the last five years.

 Cooper said: “Manchester boasts many unique cultural offerings, from its iconic music scene to its globally renowned football teams. New leisure developments are making the city a must visit destination, bringing world-class artists right to our doorstep.

“The tourism sector was hit hard during the pandemic, however it’s clear that it has come out the other side stronger and more resilient, with Manchester alone accounting for £4.65 billion of tourism and supporting around 45,000 jobs. As a result, the demand for hotel rooms is growing further, with a strong development pipeline helping to ease strains on the sector.”