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News Release

London

Commercial construction activity surges in Scotland and the North West

Industrial & logistics and education sectors are strongest performers in Q2 2015


LONDON, 5th October, 2015 – Scotland and the North West have seen resurgence in construction activity according to the latest JLL / Glenigan Construction Activity Index with the strongest activity seen in the industrial & logistics and education sectors.

Over the twelve months to Q2 2015, activity in Scotland increased by 17.6% while activity in the North West rose by 16.8%. However, although activity was relatively flat in London and the South East, it was the East of England that saw the strongest increase in the regions, at 23.0%. Nevertheless London continues to account for around a quarter of all UK construction activity.

According to JLL and Glenigan’s data, the recovery may be related to the strong performance of the industrial & logistics sector which saw £3.2bn of starts over the 12 months, a 12.8% increase on the £2.8bn recorded in Q1 2015. The education sector was also a strong player experiencing an 11.3% increase in activity to £6.2bn. In contrast, the core commercial sectors of offices (£6.1bn, down 4.6%) and retail (£2.9%, up 4.7%) witnessed more stability in construction volumes.

Helen Gough, head of Buildings & Construction, JLL, said: “Construction activity, previously concentrated in the South East and London, is beginning to bounce back in other major urban areas such as Greater Manchester and Scotland’s central belt which included the 80,000 sq ft Iberdrola/Scottish Power HQ under construction in Charing Cross, Glasgow.

“The overall UK picture shows growth slowing slightly over the second quarter with volumes rising by only 2%, down from the extraordinary 7.9% recorded in the first quarter of this year. However, our figures imply that growth in both construction and total output will increase and we expect markets to grow in line with stronger economic prospects over the coming years, and certainly up to 2018.”

Allan Wilén, economics director at Glenigan, added: “Increased construction activity has given rise to a steady increase in construction costs through Q2 2015. In London, contractor order books remain full while many of the UK’s regional cities are beginning to follow suit. We expect costs will continue to rise and consequently stretch the market’s ability to deliver construction projects, particularly at short notice throughout 2016. As a result, portfolio and capital planning will be increasingly critical to businesses.”