Retail real estate was a welcome bright spot for construction starts over recent months – the only non-residential market in which the number of new projects has risen on an annual as well as quarterly basis.
The latest construction index from Glenigan, covering April to June, found that the number of retail project starts rose by 8% quarter-on-quarter and 21% year-on-year. The index covers construction projects valued at up to £100m.
Non-residential starts fell by nearly 10% compared to the previous three months and 15% year-on-year. The worst performing sectors were utilities, offices, healthcare and community and amenity – all recorded falling numbers of starts quarter-on-quarter and year-on-year.
Industrial and hotel and leisure starts remain down compared to a year ago but were up on a quarterly basis. The opposite was true for education and civil work projects.
Residential starts were 6% higher than in the first quarter but remain some 27% behind their year-ago levels. That left total construction starts across residential and non-residential schemes down 2% on the quarter and 19% on the year.
Glenigan economist Drilon Baca said: “Pockets of growth provided a welcome boost to the sector following a slow front half of 2024. The election had a considerable effect on industry behaviour, resulting in a project-start slowdown as firms took a ‘wait and see’ approach.”
She added: “Looking forward, the new government’s decision to rapidly consult on reforms to the National Planning Policy Framework has unlocked opportunities for the built environment. The re-introduction of mandatory housing targets should help to ease the backlog of major housing sites, providing a boost to the industry, through a knock-on effect that will see other verticals benefit through more work.”
Image © Mathias Reding/pexels
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