The outlook for the UK commercial construction sector continues to be impacted by general economic and business uncertainty. The economy is lacking momentum, with expectations for growth falling further to 1.5% both this year and next. Within this, the construction sector has been particularly stagnant, with output falling by 0.8% in the most recent 3-month period.
In spite of the current downturn, the construction sector remains broadly optimistic about future growth. While greater caution by private investors in commercial projects is likely in the short-term, volatility in the sector may be offset by public investment and the diminishing effect of the initial post-Brexit reaction.
Commercial construction in Q3
New builds in Q3
The growth was predominantly driven by the core commercial sectors, which combined to reach £7.4 billion in the 12 months to the end of September, an increase of 11.3%. The retail sector was the strongest performer, growing 28.4% to £1.9 billion, followed by industrial with growth of 8.2% to £1.5 billion and office which was up 5.7% to £4.0 billion.
There was an uptick in activity across the regions. Regional activity now accounts for a 59.2% share of the total, up from 55.7% in Q2. The West Midlands was the largest driver, as activity increased 69.8% to £1.0 billion, with £200 million of Commercial & Student Accommodation starting on-site in Birmingham. Wales was another strong regional performer, with construction increasing 68.2% to £0.8 billion. This is a result of the on-site start of a new £350 million Critical Care Centre in Cwmbran. In the East Midlands activity was up 39.6% to £1.1 billion, with a £625 million Research & Development Centre starting on-site in Loughborough.
Click on the circles to see the city indexes by region
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