Adderstone confirms positive indicators

Sep 27 2007 by Francesca Craggs, The Journal

A RECENT report produced by the Chartered Institute of Purchasing and Supply (CIPS) showed a marked improvement in operating conditions in the construction sector.

The headline Construction Purchasing Managers Index rose from 61.8 in July to 64.8 in August, its highest level since February 1998, with activity growth highest in the commercial sector. Released at the same time was a report from the Construction Products Association showing that investment in UK Construction is at its highest since 2000.

With work about to commence on both the company's flagship Quay West Office Park in Sunderland and the Maling Court office development at the top end of the Ouseburn Valley in Newcastle, North-East property company, Adderstone Group Ltd, more than most confirms these positive indicators.

During the recent launch of the company's website – Adderstonegroup.com – managing director Ian Baggett said: “Adderstone’s continuing partnership with North-East contractor Brims Construction Limited has provided us with an alternative to using our in-house construction division when it comes to procuring development, particularly the larger new-build developments such as our £15m Business Park on Sunderland’s Riverside and the £7m new-build mixed use scheme under way on Newcastle Quayside.

“The re-launch of Brims has not signalled the end of Adderstone Construction division. We acknowledge that there is an undisputable advantage in retaining and strengthening an in-house construction capability and Adderstone Construction will continue to look after refurbishment of existing properties and construction of properties of less than £1.5m.” Despite the scale of the ongoing development pipeline Adderstone are still eager to pursue schemes which fit with their plans for growth.

Mr Baggett said: “We are currently in the process of reviewing several possible projects. Our partnership with Brims coupled with our own dedicated workforce puts us in a pretty unique position in the region when it comes to procuring development, no matter how large or complex the site. We have finance in place and are as hungry as ever for the right project.”

There is, of course, a less positive side to high levels of market activity. The same CIPS report on increased orders and rising levels of recruitment in the construction industry also warned of an acceleration of input price inflation which has risen to a three-month high.

Mr Baggett said: “Costs are undoubtedly increasing. A developer has to be pretty switched on if he stands any chance of making profit on a scheme in the current market. We’re fortunate that our experience has resulted in both a dedicated internal workforce we can be proud of and contacts with contractors who we trust. As the market heats up we frequently find ourselves competing in the bidding process with every man and his dog who’s watched Property Ladder and throws in a wholly unrealistic high offer without appreciating the real cost of development.

“We find ourselves subsequently being contacted by agents who appreciate that even if we don’t come up with the highest price a seller has confidence that the matter will proceed if they accept our offer.

“As a result they won’t have to waste time and incur additional expense of revisiting the market when the wannabe Sarah Beeny has worked out how much steelwork actually costs.”