Annual construction activity moves ahead

Glenigan, JLL

Commercial construction for the 12 months to the end of December rose by 4.3% compared to the previous year to reach £24.8 billion, according the latest Glenigan/JLL Commercial Construction Activity Index. In line with previously reported growth in new-build activity, data for December indicated a 15.2% year-on-year rise to £14.7 billion.

This latest rise in overall construction activity mirrored the trend recorded for construction output at the end of 2015, with the UK Construction PMI up from a 7-month low.

The report highlights a continued willingness to commit to core sectors, particularly industry, with activity well ahead of year-end 2014 figures.

The ‘core’ commercial sectors of offices, industrial, retail and hotels saw volumes up by 1.7% year on year to reach £14.5 billion. Notable projects underway or due to start include the £50 million refurbishment of Meadowhall Shopping Centre in Sheffield and the circa £150 million mixed-use developed at the Haymarket, Edinburgh.

Construction costs rose steadily through the fourth quarter of 2015, with the order books of leading contractors remaining full and benefiting from a strong pipeline.

Capacity throughout key trades and supply chains continues to be one of the primary drivers behind construction cost inflation despite improvements to underlying commodity prices, notably oil.

Tier 1 suppliers remain selective in their bidding activity, with low-risk 2-stage and negotiated appointments remaining favourable and key to securing contractor programme commitment and product quality.

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