Construction Recovery Yet to Materialise Despite Non-Residential Growth, According to Glenigan Index

Glenigan has released the September 2026 edition of its Construction Index.

The Index focuses on the three months to the end of August 2026, covering all underlying projects, with a total value of £100 million or less (unless otherwise indicated), with all figures seasonally adjusted. 

It’s a report which provides a detailed and comprehensive analysis of year-on-year construction data, giving built environment professionals a unique insight into sector performance over the last 12 months.

The September Index shows that the construction industry has not seemingly benefitted from the Burnham Bounce, expected over the summer. Far from firing on all cylinders, the sector continues to stall against a backdrop of ongoing economic uncertainty, stubborn borrowing costs and lingering investor caution.

However, despite poor year-on-year performance, with project starts down 20% compared to 2025, results held relatively steady against the preceding three months, only dipping 2%. It indicates that, whilst the sharpest drops may be behind us, there’s still a steep hill to climb before we see the 2027 recovery predicted in Glenigan’s most recent Summer Forecast.

Getting to the heart of what’s holding back recovery, residential remains the sector’s biggest laggard. In the private sphere, developers review the viability of sites in response to weak house sales and higher construction costs including the impending building safety levy.

Yet it could be a different story for social housing in the coming months with Number 10’s renewed commitments to housebuilding, giving the industry potential cause for optimism in the coming months; especially if there are new public spending commitments for these types of projects in the Autumn Budget. Whether this will translate into shovels in the ground in the short-term remains to be seen, but it will help to shift the mood of a vertical that remains stubbornly stagnant.

On the other hand, small shoots of revival continue to grow in non-residential, and could offer a much needed shot in the arm for UK construction.

Office starts, primarily driven by commercial fit-out and refurbishment, continue to perform impressively with industrial and health showing an encouraging uplift, edging the vertical slightly ahead year-on-year and offering a welcome glimmer of hope in an otherwise cautious market.

Commenting on the Index, Glenigan’s Allan Willen says: “After a rough start to the year, it’s fair to say the sector caught its breath over the summer and, whilst activity levels remain painfully low, they have stabilised. It’s a positive sign that the freefall, which began in Q.2 has finally ground to a halt; That said, we’re not exactly climbing yet.

“The real bright spot is non-residential, but a fresh cabinet, headed up by a new Prime Minister with new priorities could easily upset the apple cart. Even the sectors doing well have caveats attached. Office fit-outs continue to hold up, although with occupancy rates remaining stubbornly low, it begs the question will developers keep backing new schemes. Meanwhile, residential remains a drag on overall activity, as developers weigh up site viability against higher construction costs and the looming building safety levy.”

Sector Analysis – Residential

It was yet another disappointing period for residential construction as project starts weakened significantly, declining 15% against the preceding three months, falling 36% compared with 2025 levels.

Looking closer, private housing was the largest component of activity, with various projects supporting overall activity. However, the sector remains stuck in reverse declining 8% against the preceding three months and plummeting 37% lower than a year ago.

Social housing experienced a particularly weak period, with a steep drop falling 29% against the preceding three months and declining 30% on the previous year.

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Sector Analysis – Non-Residential

The non-residential verticals experienced a relatively strong period, with offices again pulling the sector up, soaring 61% against the preceding three months, and standing 44% above the previous year. The £99 million West One development in London helped support overall sector activity.

Industrial activity also strengthened significantly, supported by the £22 million Panattoni Park warehouse development in Swindon, increasing 37% against the preceding three months and remaining only 2% lower than a year ago.

Retail activity was broadly stable, declining only 2% quarter-on-quarter, yet standing 4% above last year’s level.

Hotel & Leisure experienced a sluggish spell dropping 3% against the preceding three months, standing 11% lower than a year ago.

Sector Analysis – Public Sector

Health construction performed well, with a 17% spike in activity against the previous year despite declining 7% compared with the preceding three months. Community & Amenity indicates the dial is moving with an 11% rise against the preceding three months but remained 9% lower than last year’s level.

Education experienced a weaker period, declining 38% compared with the preceding three months and standing a quarter (-25%) below the previous year.

Sector Analysis – Civils

It was a resilient period for Infrastructure work with starts on-site showing an impressive uptick increasing 40% against the preceding three months, although the sector remained 21% lower than a year ago.

Civil engineering work remained buoyant with starts on-site rising 23% against the preceding three months but remained 24% below the previous year.

Utilities activity rose 5% quarter-on-quarter but was 27% below last year’s level.

Regional Outlook

The North West led the pack surging 46% against the preceding three months and standing 8% above the previous year.

Yorkshire also performed well, climbing 43% quarter-on-quarter and remaining a healthy 11% above last year’s level.

The East Midlands advanced steadily too, rising 27% against the preceding three months and standing 4% up on the previous year.

London was relatively stable, dipping just 6% against the preceding three months but remaining 2% higher than a year ago.

Wales lowered 13% quarter-on-quarter, but it stands 14% above last year’s level.

Whilst the South West rose 7% quarter-on-quarter, it remained a staggering 35% behind last year’s figures.

The North East slipped 19% against the preceding three months and trailed 30% below last year’s level. Scotland fell 9% quarter-on-quarter and 32% year-on-year. Northern Ireland declined 32% against the preceding three months and stood 11% below the previous year.

The East of England declined 28% against the preceding three months and stood 34% below the previous year. The West Midlands weakened by 18% against the preceding three months and plummeted 41% lower than a year ago. The South East also weakened sharply, tumbling 29% quarter-on-quarter and 43% year-on-year.

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