Supporting industry growth in key sectors

March 20, 2025

Despite the influence of many factors on the construction industry’s output, the sector has shown resilience and a positive outlook for the coming years. Economic conditions, political changes, and regulatory shifts are key industry performance drivers, but they have not deterred the industry’s growth.

The General Election in July 2024 caused a temporary slowdown in public sector activity as the new government reassessed programmes and priorities. However, the private sector showed signs of stabilisation in 2024 after a 7% decline in projects that started in 2023, driven by weak economic activity and high interest rates. By Q3 2024, project starts, particularly in private housing, retail, hotels, and leisure, showed signs of recovery as market confidence improved.

With renewed construction growth expected in 2025/26, supported by a stronger UK economy and increased consumer and business confidence, we explore which sectors are set to thrive and how we are prepared to support them.

Healthcare: Growth anticipated in 2026

The long-term outlook for the health sector remains promising, with project starts rebounding by 11% in 2024 after an 8% decline in 2023. Despite delays in major projects under the New Hospital Programme, smaller developments have progressed. The NHS remains a priority for the Labour government, with increased capital funding announced for 2025/26. This year, the government is expected to announce a promised 10-year NHS plan outlining further strategy and investment. Glenigan is projecting a modest growth of 1% in 2025 and an additional 10% increase in 2026, following the anticipation of increased funding.

With extensive experience in healthcare projects, we are prepared for this increased investment. We have worked on developments such as Ruby Ward in Maidstone alongside Kier Construction, Gardiner & Theobald, and Rackheath Medical Centre near Norwich with Darwin Group. Our expertise in regulatory compliance covers critical areas such as fire safety, accessibility, and energy efficiency—ensuring that healthcare facilities meet the highest safety, functionality, and sustainability standards.

Our expertise has been recognised, as reflected in the words of Harry Pluckrose from Gardiner & Theobald:

“Harwood acted as Building Control Approved Inspector for the Ruby Ward project. They were thorough and diligent throughout, helping to ensure a high-quality end product in accordance with Building Regulations requirements.”

Offices: New builds, and refurbishments are in demand

The COVID-19 pandemic significantly reshaped how and where we work. While many shifted to remote work, the return to offices has driven hybrid working trends, set to fuel sector growth in 2025 and 2026, with demand for new builds and refurbishments on the rise.

Although overall office space requirements are expected to decline, strong demand remains for high-quality, centrally located offices as businesses reassess their needs and adapt existing spaces. As a result, the sector is projected to grow by 18% in 2025 and 4% in 2026.

Office refurbishments and fit outs are central to the evolving needs of hybrid workplaces. Our team ensures compliance with building regulations while keeping projects running smoothly and on schedule. Recent projects, including fit outs at 7 Bishopsgate and Churchill Court in Bromley, highlight the trust placed in us to ensure full compliance with regulations has been achieved.

Hotel & Leisure: Increased tourism to boost project starts

After a challenging period of economic hardship, hotel and leisure project starts have rebounded in 2024, with further growth expected over the next two years. Rising disposable incomes and a projected surge in tourism are set to drive investment and accelerate project starts.

The hospitality sector experienced considerable post-pandemic challenges, resulting in fewer new developments in 2023. However, a strong recovery in 2024 reignited momentum in the industry, and Glenigan forecasts:

6% growth in 2025
A further 9% increase in 2026

We are well positioned to support this continued demand for new hotels, having played a key role in the construction of the Oval House Hotel in London and the extension and barn conversion at Kings Arms in Canterbury near Canterbury to create additional accommodation.

Data centres: AI driving growth

Artificial intelligence (AI) is expected to fuel a surge in data centre investment, with these facilities forming the critical infrastructure needed to power AI applications. The UK government has announced ambitious plans to position Britain as a global leader in AI. At the same time, international investment continues to grow – £6.3 million has been invested in US firms such as CyrusOne, ServiceNow, Cloud HQ, and CoreWeave to expand their data infrastructure.

Building data centres requires meticulous planning and precision. Structural considerations like floors designed to withstand heavy loads have significant civil engineering implications. Fire safety and compliance are also paramount, given the sensitive equipment housed within these facilities.

Choose a building control partner you can trust

Partnering with a trusted building control expert is essential for ensuring project success. At Harwood, we work collaboratively with clients to navigate complex regulations, providing expert guidance to ensure full compliance while keeping projects on track.

With the construction industry set for renewed growth in 2025/26, having a knowledgeable and reliable building control partner has never been more critical. Our extensive experience across key sectors – including healthcare, offices, hospitality, and data centres – positions us to support the industry’s evolving needs.

If you want our support on an upcoming project, please call 01227 931 777 (Canterbury), 01908 012 6669 (Milton Keynes), or email enquiries@harwood.uk.com.