Construction starts on offices across the UK fell by 33% in the three months ended September, according to new figures from Glenigan.
Starts were down 37% year-on-year.
Glenigan’s latest Construction Index reveals a slowdown in starts across both commercial and residential development.
It found that the value of underlying work starting on-site fell by 3% against the preceding three months to stand 7% lower than a year ago.
The commercial sector was most severely affected, posting sharp project-start declines during Q3.
In the industrial sector, project starts were impacted almost as much as offices, falling by 21% against the preceding quarter and by 17% on the previous year.
The one shining beacon in the commercial sector, however, was was hotels and leisure, which experienced a strong period, increasing by 29% against the preceding three months and by 83% against the previous year.
Residential project starts weakened during the three months to September, albeit it at a softer rate than earlier in the year and less severe when compared to 2022 figures.
The value fell by 2% against the preceding three months to stand 9% lower than 2023 levels.
UK regional performance was poor too, with most regions suffering declines in project starts.
The North East and Wales experienced the greatest falls in project starts against the preceding quarter, falling by 44% and 36%, respectively. Both regions also dropped on the previous year, declining by 39% and by 47%.
Yorkshire also performed badly, with project starts falling by 28% against the preceding quarter to stand 16% lower than a year ago.
The value of starts in London declined by 9% against the preceding three months and remained 26% down on the previous year.
However, there were a few bright spots.
Project starts in both the South West and Northern Ireland grew against the preceding three-month period, up by 14% and 7% respectively and up by 13% and 42% against a year ago.
The East of England also performed well, up by 8% on Q2 and 14% on Q3 2023.
Glenigan economic director Allan Wilen said: “Confidence remains low in the private sector, not helped by the prospect of the upcoming autumn budget statement, which many see sweeping changes to tax and planning policy.
“Investors are, understandably, cautious. Likewise, a lack of clarity on public sector spending has also pushed back project start dates and left some up in the air altogether. Everyone will be on tenterhooks to see what will come out of the Spending Review, but this is still months away and leaving many high and dry. It makes an uncertain situation even more precarious, and the sector is in a delicate position, highlighted by the collapse of ISG and its subsidiaries last month.”
He added: “However, the sector has weathered far worse storms than this, and it was encouraging to see hotel and leisure starts way up on previous figures, hinting at a much-needed revival in one of the UK’s hardest-hit verticals. Hopefully, clarity on the announcements will help to assuage the unease, which is having a significant knock-on effect on almost every other vertical, dampening overall construction starts.”
Photo by Jiyoung Kim/Pexels
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