^{Source: Markit, Savills Research}

Future Expectations

■  Despite seeing a softer increase in total commercial projects during August, UK commercial developers remained upbeat towards the prospects for activity in the coming three months.

■  Activity growth is forecast by a net balance of +23.6% of panellists, the highest reading since the opening month of 2015.

■  Positive sentiment was linked to better economic conditions and increased enquiries from clients.

^{Source: Markit, Savills Research}

Commercial Activity and UK Economy

■  The chart below shows the Savills Total Activity Index against UK GDP data. The Q3 average for the Savills Index is composed of July and August data only.

■  The net balance for commercial property activity in Q3 so far is at +10.5%, down from +17.8% in Q2 and pointing to a weaker contribution to GDP in the coming quarter.

■  September data will provide further insight into the sector’s performance for the third quarter of the year.

^{Source: Markit, Savills Research}

Total level of commercial activity compared with one month ago

■  August data pointed to a further slowdown in growth of UK commercial activity, with the respective net balance dropping to a 27-month low of +6.7%.

■  Public work fell for the first time since April, while private projects rose at the weakest pace in over two years.

Office activity compared with one month ago

■ Following two consecutive monthly increases, public office activity fell in August. The net balance dropped from +4.3% in July to -4.5%.

■ Although private office projects continued to rise, the rate of expansion was only slight and the slowest since May 2013.

Retail & leisure activity compared with one month ago

■ Public retail & leisure activity increased for the fourth straight month in August, but the rate of growth eased to the weakest in this sequence.

■ Down from +15.1% in July to +4.0% in August, the net balance for private retail & leisure work pointed to the slowest rate of expansion in the current 31-month sequence of growth.

New build activity compared with one month ago

■ Public new build activity fell further in August, thereby taking the current sequence of contraction to three months. Moreover, the respective net balance was at its lowest reading since December 2012.

■ UK commercial developers indicated that private new build work continued to increase, but the rate of growth moderated.

Industrial/warehouse activity compared with one month ago

■ August data indicated that industrial/warehouse projects increased further, with rises now seen on a monthly basis throughout the past three years.

■ A net balance of +14.7% of commercial developers recorded growth, compared with +30.4% in the prior month.

Refurbishment activity compared with one month ago

■ Extending the current sequence of expansion to 36 months, refurbishment activity in the UK commercial property sector rose in August.

■ That said, growth eased to the weakest since December 2012 as indicated by the respective net balance falling to +6.0%.

Office fit-out activity compared with one month ago

■ Office fit-out work continued to increase in August, thereby taking the current sequence of growth to seven months.

■ Nevertheless, the rate of expansion was only slight and the weakest in this sequence. A net balance of +2.8% of commercial developers recorded growth.

Summary of activity in August

■ August saw a sharp moderation in growth of UK commercial activity, with the net balance dipping from +14.3% in July to +6.7%.

■ Public commercial projects decreased for the first time since April, whereas private commercial work rose at the weakest pace in 27 months.

■ Increases were seen in seven of the nine categories monitored, the exceptions being public office and public new build.

■ Industrial/warehouse activity continued to record the strongest expansion.

Regional commercial activity compared with one month ago

■ As has been the case in each month since September 2012, commercial activity rose in all three monitored regions during August.

■ The strongest growth rate was noted in the South East, although the net balance of +14.3% was the lowest in four months.

■ Commercial projects in London also expanded at a weaker pace, with the net balance posting +11.4%.

■ The slowest rise was seen in the ‘Rest of UK’, where the net balance dropped to a 32-month low of +7.4%.