23 June 2015 | Herpreet Grewal
Commercial construction in Scotland has outperformed the rest of the UK, including London, during the first three months of the year, according to results from the latest JLL and Glenigan UK Commercial Construction Activity Index.
Total starts in Scotland for the year to end of March totalled £2.1 billion, an increase of 28.1 per cent.
The increase in volumes compares with a much smaller increase of 7.3 per cent in London, a decline of -14.2 per cent in the north-west of England, and -9.2 per cent in the West Midlands, within the context of weakening growth in the UK economy, falling from 0.6 per cent in Q4 2014 to 0.3 per cent in the first three months of 2015.
The downside to increased volumes is an increase in construction costs, which are expected to rise well ahead of inflation, primarily owing to limited contractor capacity, growth in the commercial sector and a sustained rise in the residential market.
Specific trades are experiencing significantly higher than inflation costs including mechanical and electrical services, curtain walling and demolition contractors, where labour shortages are pushing up costs.
Labour and material strategies are also affecting construction, with the lead-in time for bricks, for example, extending for up to 16 weeks.