^{Source: Markit, Savills Research}

Future Expectations

■  The net balance measuring sentiment regarding the three-month outlook for commercial activity fell from +23.6% in August to +17.9% in September.

■  Nonetheless, the latest reading still indicated a strong degree of optimism among UK commercial developers.

■  Anecdotal evidence suggested that acquisitions and client requests are the main factors expected to drive activity growth in the coming three months.

^{Source: Markit, Savills Research}

Commercial Activity and UK Economy

■  The chart to the right shows a three-month average of the Savills Total Activity Index against UK GDP data.

■  The net balance measured by the Savills survey averaged +11.0% in Q3, down from +17.8% in the previous quarter.

■  This indicates that the commercial property sector is anticipated to post a weaker rise in GVA in the third quarter of the year.

^{Source: Markit, Savills Research}

Total level of commercial activity compared with one month ago

■  As has been the case for 37 successive months, commercial activity in the UK rose during September, with the rate of expansion accelerating from August’s 27-month low.

■  The latest rise was centred on private projects, as public work declined for the second month running. The net balances posted +22.8% and -5.7% respectively.

Office activity compared with one month ago

■  September data indicated that public office activity decreased, the second successive month in which this had been the case. The net balance was at -3.1%.

■  In contrast, private office work expanded further. The net balance rose from +1.9% in August to +9.8% in September, highlighting a stronger rate of growth.

Retail & leisure activity compared with one month ago

■  Public retail & leisure activity stagnated in September, thereby ending a four-month sequence of expansion.

■  The net balance for private retail & leisure projects increased from August’s 31-month low of +4.0% to +8.7%.

New build activity compared with one month ago

■  Down to its lowest mark in almost three years, the net balance for public new build projects highlighted a faster contraction in September.

■  Extending the current sequence of growth to 37 months, private new build work rose in the latest month. The net balance was up from +11.4% in August to +15.0%.

Industrial/warehouse activity compared with one month ago

■  Growth of industrial/warehouse activity across the UK accelerated during September.

■  Rising from +14.7% in August to +23.7%, the net balance was consistent with a sharp rate of expansion.

Refurbishment activity compared with one month ago

■  UK commercial developers indicated that refurbishment work continued to expand in September, marking a 37-month sequence of increases.

■  Having accelerated since the prior month, the rate of growth was solid. The net balance was at +11.2%.

Office fit-out activity compared with one month ago

■  September saw an eighth consecutive monthly rise in office fit-out activity across the UK commercial property sector.

■  Despite accelerating since August, the rate of growth was modest overall. The net balance recorded +6.4%.

Summary of activity in September

■  September data pointed to a pick-up in growth of commercial activity in the UK economy.

■  Whereas public commercial work decreased, private activity expanded further, and at a quicker rate.

■  Six of the nine categories monitored registered growth, the exceptions being public office, public new build and public retail & leisure.

■  For the fourth consecutive month, the sharpest increase was seen in industrial/warehouse activity.

Regional commercial activity compared with one month ago

■  Growth of commercial activity was noted in each of the three monitored UK regions in September.

■  The fastest increase was seen in the South East, where the net balance was at a three-month high of +19.0%.

■  A quicker rise was also recorded in the ‘Rest of UK’, with the respective net balance rising from +7.4% in August to +16.1%.

■  London saw the rate of expansion in commercial activity ease for the third month running, with the net balance dipping to +10.9%.