Building investment is a diminishing source of economic growth

While the UK's capital stock seems to have embodied technical progress at a fairly steady, though probably increasing, rate since the mid-nineteenth century, a fundamental shift in the nature of that embodied technical progress occurred during the early part of the twentieth century. During the nineteenth century commercial buildings and infrastructure were the dominant components of capital investment, both quantitatively and as carriers of the new technologies. However, during the twentieth century, faster rates of technical progress in the manufacture of equipment compared to buildings ensured that its share of capital investment has increased, while its growing dominance as the engine of growth has been reinforced by taking over as the main carrier of new technologies. Whilst this has relegated commercial building to a secondary role as driver of productivity growth, the complementarity of structures and equipment means that the function of buildings as an integrated component of business capital remains as vital as ever. These findings have important implications for the property industry as it attempts to adapt to the demands of the new information economy.