London cost consultant says ‘all stars must align’ for resi and commercial jobs to get going 

London cost consultant Core Five has admitted that any meaningful recovery in construction is “not there yet” with the question of projects’ viability at the top of investors’ decision-making.

Yesterday, figures from the Office for National Statistics said construction output grew by 1.8% last year but output fell sharply in the final three months of 2025.

Core Five’s research lead Jon Boys said: “In the past couple of years construction sector pundits have jumped the gun when anticipating the launch date of a sustained recovery. All the stars must align before a project switches from unviable to viable and for many, we are just not there yet.”

But he added: “There are a few factors that weigh heavier on the positive side of the viability ledger, including falling inflation, interest rate cuts, stable materials prices, softening labour market, and a more favourable regulatory environment.”

Broadgate

Core Five is the cost consultant on British Land’s Broadgate development that includes the stalledf 1 Appold Street scheme (middle right) which got the green light this week after the developer secured a pre-let with a law firm

The firm said a cooling labour market is dampening wage growth, relieving pressure on recruitment and retention while prices for materials such as structural steel and concrete had stabilised.

“Though low demand is nothing to be celebrated, from a cost point of view it means contractors are hungrier making 2026 a great year to buy,” Core Five added.

“Firms told to ‘survive until 2025’ will be looking to ‘lay some bricks in 2026’. The insolvency and redundancy data are ones to watch as losing capacity risks jeopardising the recovery when it arrives.”

 The firm said residential schemes remain hamstrung by high build costs and high costs of finance although regulatory changes, such as lower affordable housing requirements, will only “shift the dial for some schemes at the margins”.

And it added: “Better resourcing of the BSR is leading to a trickle, not a deluge of new project starts.”

Core Five also warned that viability was continuing to dog commercial jobs getting out of the ground. He said: “The viability challenges remain very real, meaning progression from PCSA to spades in the ground is not guaranteed, and there are a number of bigger schemes completing this year, freeing up teams.”

In its update for the Q1 this year, Core Five said its tender price forecasts for 2026 has been revised down for both mainstream projects, from 3.5% to 2.5%, and major projects, from 4% to 3.5%.

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