The number of construction projects starting increased by 14% in the three months to November compared to the previous three months.
This has driven by a 161% increase in office project starts over the same period.
Glenigan, an insight and intelligence firm, said the news will come as a relief to both contractors and subcontractors, who have had a torrid six months punctuated by policy flip-flopping and a case of acute socio-economic hiccups.
Allan Wilen, economics director at Glenigan, said: “The currently tempestuous economic conditions are making it difficult for the construction sector to get out of first gear, where it seems to have been stuck throughout the second half of 2025.
“Hopefully the Chancellor’s recent Budget Statement will have gone some way to providing clarity around future funding, ending a period of weathervane politics in which potential property and tax policies were floated across the market, denting both consumer and private investor confidence. Now we know the intended direction of travel, hopefully the industry can get back on track.”
Elsewhere conditions appear to be less positive.
Main contract awards fell by a quarter (-26%) year-on-year and dropped by 10% in the three months to November compared to the preceding three months.
Similarly, detailed planning approvals were down by 9% against the preceding three months and by 26% compared with 2024 figures.
Wilen added: “In the here and now though, this revival probably seems far on the horizon with performance remaining depressed. A modest lift in starts activity over the Review Period has been largely driven by an extraordinary surge in underlying office construction.
“Elsewhere, minimum wage increases are driving up retailing and hospitality labour costs. This has led to pauses and delays as businesses look to rebalance budgets and re-evaluate resources, deterring investment in retail and hotel & leisure projects.
“As we look ahead to Q.1 2026, the Chancellor will need to make good on her £120 billion infrastructure pledge, putting the pedal to the metal to get the sector motoring once more.”
Office growth is being driven by demand for data centres, responding to consumer and businesses’ ravenous appetite for digital technology and a growing reliance on AI.
Regionally, the East Midlands, London, the North East and the South East experienced a strong period of growth. The Capital posted the highest share of project starts during the three-month-to-three-month period (+80%), largely thanks to a 184% starts increase boosted by the £800 million Project Vista Development in Lambeth.
Wales was responsible for the leap in planning approvals, with the value of consents jumping more than 40 times year-on-year. This was predominantly the result of the green light being given to a £5 billion CWL41 data centre development in Bridgend.
The community and amenity construction sector also strengthened, with project starts rising both year-on-year and quarter-on-quarter.