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Steel outlook optimistic for 2024

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At this time last year, we noted that the construction industry had proven remarkably resilient in 2022, considering the headwinds it had to struggle against in the previous couple of years. The post-COVID-19 hangover, strongly rising inflation, rising interest rates, skills shortages and war in Ukraine, all conspired to peg back growth; but none of it spelled serious systemic problems for the industry.

In 2023 some of these problems remained with us and were joined with new issues like the Gaza conflict and political instability in the UK. There were some casualties among companies large and small as continuing subdued markets tested balance sheets and cash flows. Yet construction as an industry, and the steel construction sector, continued to exhibit an underlying strength that justifies optimism for 2024.

One of the big worries post-COVID-19 has been that workforces had abandoned the idea of going to the office, and that eventually all who could would work from home. There has certainly been some downscaling of property requirements by big employers in the UK’s commercial districts, but there are signs that the initial surge towards home working has turned into a slower drift and has for many gone into reverse. Some major employers have told staff bluntly to get back to the office, and hybrid work involving maybe three days a week in the office is the best that many who would rather work from home exclusively can expect.

Along with a fall in demand for office space there has been a rise in demand for higher quality space, which might involve moving to new space or to freshly refurbished and upgraded spaces. Steel is well positioned to benefit from this. Owners of steel-framed buildings will always find it easier to reconfigure building layouts for changing needs.

The latest Crane Survey from Deloitte UK, which we report on in News, supports an optimistic outlook with a record number of new starts in the London office market in the six months to 30 September. Refurbishments dominated the new starts, the highest on record for the second survey in a row. Probably more encouragingly, new builds have rebounded from their post-COVID-19 low to account for over a third of the new starts.

All of which is good news. Deloitte also says there is an increasing acceptance of sustainability requirements of buildings and developers expect to reach operational net zero across their portfolios by 2040. Which is also good news, for steel construction especially, given the strong sustainability benefits of steel that have always been available at no extra cost to developers and are now boosted by the sector’s commitment to net zero as spelled out in the 2050 Decarbonisation Roadmap.

It would be hard to find a project in NSC these days that doesn’t have sustainability at the heart of its design and construction. That stretches from the client all through the construction teams. One thing we can expect to see more of in 2024 is the increasing use of Material Passports on projects, as on the Edenica office development featured in this issue. Material Passports will encourage the recycling and reuse of building materials. With recycling and reuse potential increasingly factored into proper whole life cost analysis, 2024 can be expected to be another year when steel’s sustainability benefits make a vital contribution to the climate change battle.

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