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North-west and Scotland drive growth in commercial activity as London falls by 5%

The North-west and Scotland both saw commercial activity rise by over 15 per cent in the 12 months to Q2 2015, driven by the industrial and logistics sectors.

Commercial construction activity in the North-west of England grew by 16.8 per cent in the 12 months to the end of June, while in Scotland, activity grew by 17.6 per cent, according to data from the JLL and Glenigan Commercial Activity Index for Q2 2015.

Scotland is now the second largest market for commercial activity in the UK outside London and the South-east, having reached £2.5bn, while the North-west is the third largest at £2.4bn.

The East of England was the star performer, posting growth of 23 per cent over this period, and along with the North-west and Scotland, was one of only three regions to post an increase of more than 10 per cent.

London saw activity drop by 5.3 per cent to £6.4bn, but the capital alone still accounts for more than a quarter of all commercial activity in the UK.

Elsewhere, Yorkshire and the Humber recorded a decline of 13.8 per cent, with output falling to £2.1bn.

Overall, total activity for the 12 months to Q2 2015 hit £26.1bn, compared to £25.6bn for the 12 months to Q1.

Across the seven sectors covered in the Index, industrial and education were the two strongest performing, and the only two sectors to post double-digit growth.

Industrial activity grew by 12.8 per cent, rising from £2.8bn in the 12 months to Q1, to £3.2bn in the 12 months to Q2.

Education posted growth of 11.3 per cent over the same period, increasing from £5.5bn to £6.2bn, making it the largest commercial sector.

Offices, formerly the largest sector in the UK, slipped into second place after activity dipped from £6.4bn to £6.1bn for the 12 months to Q2.

Elsewhere, medical and health spending was static, remaining at £3bn, while retail posted a slight increase, rising from £2.8bn to £2.9bn over the same period.

Commenting on the data, JLL head of buildings & construction Helen Gough said: “Construction activity, previously concentrated in the South-east and London, is beginning to bounce back in other major urban areas such as Greater Manchester and Scotland’s central belt which included the 80,000 sq ft Iberdrola/Scottish Power HQ under construction in Charing Cross, Glasgow.

“The overall UK picture shows growth slowing slightly over the second quarter with volumes rising by only 2 per cent, down from the extraordinary 7.9 per cent recorded in the first quarter of this year.

“However, our figures imply that growth in both construction and total output will increase and we expect markets to grow in line with stronger economic prospects over the coming years, and certainly up to 2018.”

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