Commercial starts drive workload rise as housing cools

Aaron Morby 8 years ago
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Commercial and civil engineering work are starting to take over as the main driver of construction activity in the UK.

According to construction information specialist Glenigan’s latest survey of project starts, commercial activity is ramping up at a marked pace, driving construction growth into the fourth quarter of 2014.

Office and retail starts both soared 25% year-on-year, with the commercial sector boosted by several major London schemes, including the £95m One Mitre Square development which broke ground in August.

Across the industry as a whole the value of projects starting on site during the three months to October rose 4% year-on-year, marking 17 months of consecutive growth.

Allan Wilén, Economics Director at Glenigan, said: “Commercial and civil engineering work are taking over from housing as the lead drivers of new construction starts.

“This broad footing of construction growth bodes well for the upcoming period of political uncertainty ahead of the general election, and as expectations of an interest rate rise appear to be dampening confidence among UK homeowners.”

Following last month’s dip, the Glenigan Residential Index is hovering just outside of negative territory, recording no change compared to a year earlier.

Private house building remains on the up, despite the recent stall, with starts rising by 15% so far in 2014. But social housing continues to struggle due in part to winding down of the first Affordable Housing Programme.

This divergence can also be seen within the planning pipeline; during the three months to September the underlying value of private housing approvals was up by 24%, while social approvals were down 24%.

A weakening in industrial confidence has coincided with the first fall in project starts for the sector since July last year. Nonetheless, Glenigan expects this slowdown to be short-lived, with industrial remaining on course to be the fastest expanding sector during 2014.

A substantial flow of prospective industrial projects continues to make its way through the planning pipeline, with the underlying value of projects receiving approval up 42% in the three months to September.

Freed from the constraints of referendum uncertainty, a slew of work starting during October has seen Scotland return to growth after four months of declining starts. As in recent months, the northern English regions, Northern Ireland and Wales are gaining ground fastest, all seeing double digit growth over the last three months.

By contrast, the East and South West of England saw starts fall back compared to a year ago, while the South East has kept pace with the UK average of 4% expansion.

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