^{Source: Markit, Savills Research}

Future Expectations

■ Prospects towards the three-month outlook for output remained positive in July, with the degree of confidence the strongest since March.

■ A net balance of +22.1% of commercial developers forecast higher levels of activity in three months. This compares to +21.3% in June.

■ Expectations of greater activity and new contract wins were reported to have led to the latest optimism.

^{Source: Markit, Savills Research}

Commercial Activity and UK Economy

■ The chart to the right shows the Savills Total Activity Index against UK GDP data.

■ The commercial property activity net balance rose in Q2 to +17.8% from +13.1% in Q1.

■ Meanwhile, a further improvement in the UK economy was recorded, as UK GDP growth quickened from 0.4% in Q1 (the lowest reading since the end of 2013) to 0.7% in Q2.

^{Source: Markit, Savills Research}

Total level of commercial activity compared with one month ago

■ Growth of total commercial activity softened in July, with the respective net balance falling to a three-month low of +14.3%.

■ Public projects remained unchanged from the prior month, while private work expanded at the weakest rate since April, albeit one that was still solid.

Office activity compared with one month ago

■ Public office activity increased for the second month running in July, with a net balance of +4.3%.

■ Latest survey data indicated a further expansion in work on private office projects, albeit at a weaker rate than June’s 11-month peak.

Retail & leisure activity compared with one month ago

■ Both public and private retail & leisure activity increased at softer rates in July.

■ The net balance for public retail & leisure work posted at +5.4%, down from +9.8% in June (the highest reading in 17 months).

■ Meanwhile, the net balance for private retail & leisure work posted at +15.1%, the weakest reading in three months.

New build activity compared with one month ago

■ UK commercial developers indicated that public new build work contracted for the second straight month in July.

■ Growth of private new build work activity slowed from the prior month, with the net balance posting at +14.2% down from +21.2% in June.

Industrial/warehouse activity compared with one month ago

■ Industrial/warehouse activity increased for the thirty-fifth month running in July.

■ Despite easing from the prior month, the latest expansion was strong, with the net balance at +30.4%.

Refurbishment activity compared with one month ago

■ Work on refurbishment projects in the UK commercial property sector rose in July, thereby stretching the current period of expansion to thirty-five months.

■ Despite falling from June’s reading (+30.9%) the rate of growth was solid (net balance of +18.5%).

Office fit-out activity compared with one month ago

■ The current period of expansion in office fitout projects was extended to six months in July.

■ The rate of growth slowed from June’s 13- month peak, but was nevertheless strong.

Summary of activity in July

■ The upturn in total commercial activity was sustained in July. The growth rate softened from June, but was solid overall.

■ Public commercial work remained unchanged from the prior month, while growth in private commercial activity eased.

■ Eight of the nine monitored categories registered increases, the exception being public new build projects where a fall was recorded.

■ The fastest expansion was recorded in industrial/warehouse activity for the second consecutive month.

Regional commercial activity compared with one month ago

■ All three monitored regions highlighted softer increases in commercial activity in July.

■ London saw the weakest rise in commercial projects. The net balance dropped to +12.2% from +24.4% in July.

■ The respective reading for the South East posted at +17.7%, the lowest figure since April.

■ Growth in the ‘Rest of the UK’ slowed since July, but was nevertheless robust. The net balance posted at +23.0%.