Construction Work Set for 2026 Recovery After 2025 Industry Slump
Glenigan forecasts a recovery in construction over 2026 and 2027 after a difficult 2025. It expects the underlying value of project starts (schemes worth up to £100 million) to rise by 8% in 2026, led by housing, offices and industrial work, and by 13% in 2027 as Spending Review commitments and public investment, particularly in the NHS, take effect.
Economics director Allan Wilén attributes the outlook to an improving economy, rising household incomes, further interest rate cuts and clearer public spending plans.
Sector highlights include:
• Private housing: starts forecast to rise 6% in 2026 and 18% in 2027, helped by the Building Safety Regulator clearing its approvals backlog. Social housing is expected to match the 6% rise in 2026, then grow 12% in 2027. Student housing is also set to recover.
• Offices: a 13% rise in 2026 as lower borrowing costs revive investor confidence, with schemes ranging from 31 Wellington Street in Leeds (£80 million) to 65 Gresham Street in the City of London (£200 million).
• Industrial: after tariffs and instability hit manufacturing, online retail demand is expected to drive rises of 12% in 2026 and 13% in 2027.
• Health: NHS starts are forecast to fall 24% in 2025 before rising 4% in 2026 and 15% in 2027, supported by the £45 billion hospital rebuilding programme.
• Education: a 27% fall in 2025, followed by a 15% rebound in 2026 and a further 4% in 2027.
• Civil engineering: a 7% fall in 2025, then growth of 17% and 15%, driven by road, rail, energy and water investment, including Thames Water’s planned £5 billion framework for 2026 to 2030.
• Hotels and leisure: up 5% in 2026 and 12% in 2027, helped by lower business rates multipliers. Retail is expected to be flat in 2026 after a 21% fall, then rise 10% in 2027.
Overall, Glenigan expects the new year to begin a period of sustained workload growth.
