Non-Residential Uptick Hints at Slow Recovery for Construction

Industry News

The value of work starting on site dropped 7% in the three months to May and by almost a quarter (-23%) compared to last year, according to the latest Glenigan Index data.

It shows the landscape remains distinctly overcast, with the Middle East conflict still in full swing (with little sign of an immediate resolution) and the government distracted from its agenda by political infighting.

Residential activity remains frigid, reflecting ongoing affordability constraints and reduced investor appetite. There appears to be little immediate appetite amongst buyers to imply that this will change any time soon.

Simultaneously, civils work has weakened considerably, with both infrastructure and utilities contributing to the downturn. With the government plagued by infighting and intrigue, there seems to be limited room for updates on planned capital projects to indicate a short-term uplift.

However, an uptick in non-residential sectors implies that the playing field is becoming slightly less hostile for contractors and subcontractors working within many commercial verticals. Whilst the market remains fragile, these pockets of resilience suggest that a future recovery might not be as far off as it currently seems, says Glenigan.

Allan Wilen, Glenigan Economic Director

Allan Wilen, Glenigan’s Economic Director, commented: “Construction markets remain subdued, with activity declining amid ongoing economic uncertainty. On the housebuilding front, developers continue to take a cautious stance, reassessing and rescheduling planned project starts in response to weakening demand and tighter financial conditions.

“Whilst strong growth in offices, alongside modest gains in retail, education and health, helped support non-residential starts during the three months to the latest period, this was insufficient to offset continued declines across residential and civil engineering activity.”

Sector Analysis – Residential

Residential construction continues to slide, as if caught in a perpetual downward spiral. Glenigan’s data shows starts fell 24% during the Index period and plummeted 42% against last year’s figures.

Drilling down into the numbers, private housing construction starts dropped 28% against the preceding three months and nosedived 50% against 2025 levels. Social housing performance also fell, albeit slightly less severely, decreasing 14% against the preceding three months and finishing 17% down on the previous year.

Sector Analysis – Non-Residential

The non-residential sector also posted some good numbers. Particularly, offices continued its winning streak as the consistently strongest performing vertical of H1 2026, rocketing 111% during the Index period whilst leaping 57% above the previous year.

A number of high-profile projects helped support this substantial increase, including the £64 million partial demolition, recladding and refurbishment of 48 Chiswell Street in Islington, London.

Industrial

Industrial, which had been experiencing a relatively poor Q2, witnessed a reversal of fortune, rising a healthy 10% against the preceding three months. However, this was offset by a 10% reduction in value compared to the previous year.

Retail

Offering a small indicator of gradually returning consumer confidence, retail performed well, up 19% against the preceding three months to stand 17% up against the previous year.

Hotel & Leisure

If that wasn’t enough to imply the public is tentatively putting its hands back in its collective pocket, Hotel & Leisure starts also rose 9% against the preceding three months despite finishing 8% lower than a year ago.

Public Sector

There also appeared to be a small burst of activity in the public sector, with Education experiencing a relatively robust period, rising 13% against the preceding three months to finish an impressive 40% up on the previous year. Likewise, Health grew, climbing 8% over the preceding three months but ending 6% lower than the previous year.

Civils

Civils fared particularly poorly, with work starting on-site declining 33% against the preceding three months, standing 37% below 2025 levels. Taking a closer look into the associated sub-verticals, Infrastructure work starting on-site fell 11% against the preceding three months and declined by 33% on the previous year. Utilities plummeted 49% during the Index period, dropping 42% when compared to last year’s results.

Regional Outlook

Similar to recent editions of the Indexes, London performed well, rising 7% against the preceding three months to stand 44% up against the previous year. A particularly strong performance in office construction helped drive growth in the city, alongside a general uptick within other commercial and non-commercial verticals.

The South East was a mixed bag, rising 45% against the preceding three months, yet finishing 17% up on the previous year. Similarly, the East of England increased slightly, up 4% during the Index period, but remained 34% below last year.

Elsewhere, performance was subdued. The North East declined 5% quarter-on-quarter but was 7% above last year. Scotland was broadly stable, down 1% on the preceding three months and 24% year-on-year. Northern Ireland declined 13% against the preceding three months but still remained 55% above last year.