The Construction Products Association (CPA) latest Summer Forecasts are predicting growth in the commercial construction sector continuing to 2024, with warehouses particularly driving the sector forwards.

Prospects for the Housing Sector are, however more subdued with just 1.1% growth predicted for 2022 and a static market expected in 2023.

Forecasts have been revised down across both sectors due to the lagged impact of rising inflation and, consequently, slower economic growth prospects on construction industry demand likely to mean that the industry potentially sees the value of output previously expected but not the volume.


Overall across the public and private housing market CPA predicts new builds to stabilise at a little over 200,000 houses per year.   As economic activity slows, falling consumer confidence and spending, as well as slowing house price growth and the end of Help to Buy in 2023, means that potential homeowners are becoming more risk averse.

Commercial Construction

The CPA report outlines that whilst the pipeline of new towers has improved, they remain a bit thin on the ground compared to historic levels, with concerns around viability linked to inflation and underlying economic conditions potentially causing further delays to planned starts.

Fit-out, however, continues to benefit from the upgrading of existing space and demand for refurbished high-end grade A office space from tenants wishing to downsize to smaller, better quality office space as previous leases finish.  The sector is also benefitting from continued changes in use from commercial to residential or warehouses/logistics.

Energy efficiency considerations as part of net zero and corporate Environmental, Social, and Governance (ESG) requirements are also reported to be driving investment and an interesting point, attributed to Savills in the report, is a widening rent differential between grade A space with strong ESG credentials and grade B or C space.

The report does, however repeatedly highlight the huge variance in forecasts seen for the economy that underpin levels of volatility that add to the downside risks.

For warehouses, the ongoing structural shift towards e-commerce will continue to underpin strong demand for warehousing and distribution space, and this has shored up a pipeline of pre-let and speculative work. At the same time, factories construction activity is set to pick up as progress is made on both existing and planned scheme.

Alongside major capital investment in education, facilities to help compete at a global level, universities and private providers are continuing to invest heavily in purpose-built student accommodation, particularly given the strong growth in international (non-EU) students in recent times.

Public Non Housing

A concern is flagged in the report with publicly-funded projects experiencing strong rates of build cost inflation that may lead to delays.

This is a particular risk for larger planned hospital projects that have already experienced a near-doubling in cost estimates, even before the current inflationary pressures. For fixed-price contracts, it may be the case that higher costs mean the value of work is maintained, but volumes decrease.

Download the latest forecast report here

FIS members can access the latest CPA Forecast.