■ Currency market volatility has directly impacted overall build costs with Gardiner & Theobald reporting that a 10% decrease in the value of the pound has resulted in a 2–3% increase in build costs, where 60% of materials are EU imports.

Q4'16 S.P.E.C.S Score

■ As Table 1 demonstrates, the sentiment recorded by Savills specialist project managers shows that no sector or geography is seeing costs fall in the aftermath of Brexit. The retail sector, adapting to new format stores, incorporating click and collect points and better quality fit out, has seen costs increase. Meanwhile the warehouse sector has seen a pause in speculative development and the price of its key component, steel, stabilise.

^{*Timescales definition: The time taken from project sign off to project commencement including the procurement and delivery of building components}

^{Source: Savills Building and Project Consultancy}

■ Combined this gives a quarterly S.P.E.C.S score of 17 out of a maximum of 24, meaning that costs and timescales are increasing.

^{Source: Savills Research}

Strong occupational logistics market keeps contractors busy

■ Driven by structural change in the retail market, as consumers move to making more online purchases, the UK logistics market has confirmed itself to be extremely robust in the aftermath of the Brexit vote.

■ Indeed, the third quarter of 2016 has seen the highest volume of warehouse space ever transacted reaching 10.45m sq ft and ensuring that more space has been transacted by the end of the third quarter in 2016 compared with all of 2015.

■ For companies involved in warehouse project delivery three trends are having a clear impact on costs and timescales. The first being that 47% of all warehouse space transacted this year has been for build to suit units, meaning that the construction market was already in buoyant mood in the run up to the Brexit vote.

■ Secondly, 2016 has seen a slow down in most developers speculative delivery programmes with just 3.8m sq ft across 20 schemes due for delivery into 2017 compared with 8.2m sq ft in 2016. Moreover, since the result of the vote, only two speculative units over 100,000 sq ft have been announced. Exeter Property Group and Graftongate have started construction of a 372,000 sq ft unit in Cannock in the West Midlands and Prologis have announced a 275,000 sq ft unit at Marston Gate, south east of Milton Keynes.

■ Lastly, the supply of warehouse units has decreased by 22% in just one year meaning occupiers have little choice to satisfy their requirements. Looking into 2017, should the retail market remain buoyant, we would then expect warehouse demand to also remain strong, meaning that unless developers start to replenish stocks with further speculative starts build to suit will remain many occupiers only option.

^{Source: Savills Research}