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Picture of health Offices, leisure and PFI projects are making for a healthy building sector, says Andrew Bolton.

Large scale building projects are once again the main drivers of construction output now that the British construction industry has well and truly put the recession behind it. Surplus office space in London and other big cities has been largely mopped up on the back of recent economic growth. Nowhere is this more apparent than at Canary Wharf in London's Docklands, where new buildings are now under construction for the first time since the developer collapsed in the early 1990s (see page 24).

Meanwhile, most cities have at least one major Millennium or Lottery funded project worth more than £50M. And the Private Finance Initiative has spawned its first two major new health sector projects - the £214M Norfolk & Norwich hospital and the £125M Dartford & Gravesham hospital. Both these schemes are now under construction and more are expected to start up in the next 12 months.

Latest figures from Construction Forecasting & Research show that this year private commercial construction output will grow by 8% to £9.6bn - around £1bn short of boom figures reported in 1990. National contractors such as Kier say 80% of their new orders now come from private developers.

It is just as well for the industry that commercial building is doing so well. Infrastructure orders are in the doldrums, bumping along at around £500M a year and with the future of the Channel Tunnel Rail Link and Thameslink 2000 in doubt the civil engineering sector is in hiatus.

Significantly, growth in building output has been underpinned by a much more cautious approach from clients and contractors, who remember the pain caused by the last recession. 'There is not a lot of speculative property being built,' says Kier Group finance director Duncan Brand. Instead, most developers look for tenants before starting construction to ensure they are certain of realising their investments.

Those that are building speculatively are also tailoring projects to the likely demands of potential clients. Ove Arup is working on a project in the West End - the heart of London's media land. With this in mind the building is designed for maximum internal flexibility - something fast changing media organisations expect.

Growing computer use has taught developers and their engineers about designing for cabling for electronic trading systems. 'People have a lot of experience in running and operating trading floors and are defining the specifications. The requirements are a lot better known now,' says Mott MacDonald head of structures Mike Barker.

But if the building market is strong now there are signs there could be a slow down in the growth of projects after the turn of the century. By then most of the millennium projects will be finished and contractors and consultants will be looking for replacement work. By that time the PFI should be delivering more hospitals and government buildings, but an eventual slow down in the economy resulting from recent interest rate rises could take the heat out of the commercial property boom.

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