■  Growth of private commercial work quickened, with the respective net balance rising to +23.9%. Conversely, public commercial projects fell at a faster pace (net balance at -7.5%).

■  Higher activity was recorded in six of the nine monitored categories, led by industrial/warehouse. Declines were noted for public projects in the categories of office, retail & leisure and new build public.

^{Source: Markit, Savills Research}

Future Expectations

■  Although still positive, sentiment at UK commercial developers weakened for the second straight month in October.

■  The net balance dropped from +17.9% in September to a two-and-a-half year low of +9.5%.

■  Where activity is expected to expand in the coming three months, this was attributed by survey participants to improving market conditions in the wider economy.

■  Nonetheless, there were mentions that optimism was restricted by a reluctance among clients to commit to new projects.

^{Source: Markit, Savills Research}

Commercial Activity and UK Economy

■  The chart below shows a three-month average of the Savills Total Activity Index against UK GDP data. The latest data point for the Savills index reflect only the October figure.

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

■  A similar slowdown in growth was signalled by the GDP data, which fell from +0.7% in Q2 to +0.5% (first estimate) in the third quarter of the year.

^{Source: Markit, Savills Research}

Total level of commercial activity compared with one month ago

■  Growth of UK commercial activity gained strength in October, with the respective net balance posting a three-month high of +12.5%.

■  This reflected a faster expansion in private commercial work (net balance: +23.9%), as the downturn in public commercial projects intensified (net balance at -7.5%).

Office activity compared with one month ago

■  Public office activity decreased for the third month running in October and at the quickest rate in almost three years.

■  Growth of private office work was sustained, but the rate of expansion was only slight and slower than in September.

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

■  October data indicated that public new build activity dropped at the fastest pace since December 2012, with the net balance recording -9.1%.

■  Conversely, private new build work continued to increase. Despite easing since September, the rate of expansion was still robust as indicated by the net balance of +13.1%.

Industrial/warehouse activity compared with one month ago

■  UK commercial developers indicated that industrial/warehouse activity expanded during October, taking the current growth sequence to 38 months.

■  The net balance fell from +23.7% in September to +16.8% in October, pointing to a softer but still sharp rate of increase.

Refurbishment activity compared with one month ago

■  Growth of refurbishment projects in the UK accelerated during October, with the net balance of +15.7% being the highest since July.

■  Refurbishment work has increased in each month since September 2012.

Office fit-out activity compared with one month ago

■  Marking a nine-month sequence of growth, office fit-out projects rose in October. Moreover, the rate of expansion was sharp.

■  A net balance of +14.7% of commercial developers signalled growth, the highest reading since June.

Summary of activity in October

■  Growth of UK commercial activity in the UK accelerated in October, driven by private projects.

■  Public commercial work continued to fall, with the rate of contraction accelerating to the fastest since January 2013.

■  As was the case in September, six of the nine tracked categories registered growth, the exceptions being public office, public new build and public retail & leisure.

■  Despite easing in October, the rate of expansion in industrial/warehouse activity continued to outpace the other categories.

Regional commercial activity compared with one month ago

■  Regional data pointed to broad-based growth of commercial activity in October, with rates of expansion accelerating across the three monitored UK regions.

■  The ‘Rest of UK’ posted the strongest rise, with the net balance climbing to a three-month high of +20.0%.

■  The slowest, although still sharp, increase was seen in London. The net balance of +15.9% was the highest since June and above its respective three-month average.

■  At +19.4 % in October, the net balance for the South East was the highest since June.