JLL and Glenigan’s latest UK Commercial Construction Activity Index may indicate a more cautious outlook according to Jon Neale, Head of UK Research, JLL.
A more cautious outlook?
Forecasts for UK economic growth have been reined in slightly over recentmonths, but the consensus suggests that output will have grown by 2.7% over 2014, to be followed by 2.6% in 2015. This somewhat more cautious outlook is reflected in the volume of non-residential construction starts for 2014 as a whole, which at £23.8m was only 0.5% above the total for the 12 months to the end of the third quarter. However, while the volume of refurbishments and extensions fell back by 1.0% to £11.0m, the total value of new build projects rose relatively strongly, by 1.8% to £12.7m. These headline figures conceal deep differences between sectors.
When combined, the total value of educational, medical and community projects dropped by 21.8% – doubtlessly reflecting the rising tide of austerity. Meanwhile, the ‘core’ commercial sectors of offices, industrial, retail and hotels/leisure saw a combined increase of 4.5%. It should be noted that these latter projects are more concentrated in certain cities, particularly London.