According to the latest survey from Savills, commercial development activity fell for a third successive month in October.
Public sector activity contracted sharply, with decreases now recorded for eight successive months. However, private sector development ended a two-month sequence of decline, as moderate growth was recorded in October.
Approximately 26% of commercial developers recorded a fall in overall activity in the month, compared to 18% indicating a rise.
The Total Commercial Development Activity Index, a net balance monitoring the overall performance of the UK commercial property sector, posted -8.3% in October, improving from -13.8% in September.
Commenting on the October survey, Michael Pillow, Head of Building Consultancy at Savills said: "This month saw a recovery in private sector activity, but continued falls in development activity for the public sector. In this age of public sector austerity this trend is likely to be sustained."
Commercial developers expect activity levels to fall over the next three months. Moreover, the degree of negative sentiment worsened in October, but remained above August's 18-month low.
Survey respondents anticipate lower levels of activity in all three categories monitored. However, panelists are the most downbeat about opportunities for office development over the next three months.
Commercial developers indicated that concerns over the lack of available credit, the general economic outlook and cuts in public spending all contributed to the pessimistic outlook.
Summary of activity
- October data signaled lower levels of activity in eight of the nine broad areas of commercial development monitored by the survey.
- Industrial/warehouse activity was the only category to record a rise.
- Public sector new build and public sector office development continued to indicate the sharpest contractions in activity.
- Panelists indicated that the weakest decreases in activity were in private sector new build projects and refurbishment.