Commercial construction in London hits post-crash high
27th April 2016
Commercial construction in London has hit its highest level since the nancial crash, with activity totalling £7.4bn.
However, levels across much of the rest of the country took a dip in the first quarter of the year.
According to the latest JLL and Glenigan UK Commercial Construction Activity Index, the level of speculative office development under construction in central London totalled 8.3m sq ft at the end of Q1 2016, well ahead of the long-term average of 5m sq ft.
In the West End office market alone, construction started on nine speculative schemes in Q1, comprising 596,997 sq ft - the highest level of starts since Q4 2014.
The largest starts were at Brunel University London, where 241,000 sq ft of construction got under way, and at The Foundry, where a refurbishment totalling 110,000 sq ft has begun.
Nationally, commercial construction activity slowed in Q1 2016, falling 5.5% year on year to £23bn.
Only three regions - the West Midlands, the North West and the east of England - posted growth in Q1, with the former doing particularly well, at 13.7% up to £1.8bn year on year.
Yorkshire fared the worst, with a 44% fall in activity to £1.4bn, although this was mainly caused by an unusually strong Q1 2015 dropping out of the cumulative figures.
In Wales, activity fell by 53.2%, while Northern Ireland - the smallest base in the sample - saw a 7.1% increase in commercial building levels.
“Construction activity is down on the annual and quarterly comparison, although activity levels are broadly in line with the long-term trend over the last five years,” said Jon Neale, lead director of JLL’s UK research team.
“Nevertheless, the pace of growth we have seen over the past couple of years is beginning to moderate. This could be partly due to wider economic and political uncertainty, but to some extent growth will also be moderated by skills and resources shortages, with workloads nearing capacity in some cases.”
Helen Gough, lead director of JLL’s buildings and construction team, added: “Generally, the construction industry remains cautious.
However, a recent fall in costs has off ered some rebound for the commercial sector. While total construction starts fell marginally this quarter, construction data on the whole remains volatile.
“Construction activity levels remain solid, with London showing notable signs of resilience.”
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