^{Source: Markit, Savills Research}

Future Expectations

■ June data indicated that UK commercial developers were pessimistic about the three-month outlook for activity for the first time since September 2012.

■ The future expectations net balance dipped from +6.6% in May to -4.5%, with all three areas of activity covered by the survey anticipated to decrease.

■ Negative sentiment was linked by survey participants to uncertainty towards the economic outlook.

^{Source: Markit, Savills Research}

Commercial Activity and UK Economy

■ The chart to the right shows the Savills Total Activity Index against the UK Construction PMI®.

■ At 46.0 in June, the UK Construction PMI® dropped below the neutral 50.0 threshold for the first time since April 2013, and pointed to the weakest overall performance in the sector for seven years.

■ Residential construction was the worst performing category, while civil engineering work was broadly stable. Commercial building activity posted one of its weakest readings for six-and-a-half years.

^{Source: Markit, Savills Research}

Total level of commercial activity compared with one month ago

■ June data highlighted a renewed decline in commercial activity across the UK, with the respective net balance dropping from +1.0% in May to -3.3%.

■ Leading overall activity to fall was a further decrease in public projects, as private work continued to expand. The respective net balances posted -20.0% and +4.9%.

Office activity compared with one month ago

■ UK commercial developers recorded a seventh consecutive monthly contraction in public office activity during June. The pace of decrease remained marked.

■ Private office projects declined for the third straight month, and at the sharpest rate in almost four years. The net balance registered -11.0% in June.

Retail & leisure activity compared with one month ago

■ The downturn in public retail & leisure activity intensified in June. At -17.6%, the net balance posted its lowest reading in over four years.

■ Private retail & leisure work decreased for the first time since January 2013. The net balance fell from +2.1% in May to -3.2%.

New build activity compared with one month ago

■ June saw public new build projects dip at the fastest rate since August 2012. This was signalled by the respective net balance falling from -2.8% in May to -19.0%.

■ Private new build activity also decreased in June, thereby ending a 45-month sequence of expansion. That said, the rate of contraction was only fractional.

Industrial/warehouse activity compared with one month ago

■ UK commercial developers signalled a further upturn in industrial/warehouse activity during June, marking a 46-month sequence of growth.

■ Nevertheless, the net balance fell from +11.8% in May to a 42-month low of +4.3%, highlighting a slight rate of expansion.

Refurbishment activity compared with one month ago

■ Refurbishment activity across the UK stagnated during June, ending a 45-month sequence of expansion.

■ The net balance was down from +1.0% in May to 0.0% in the latest survey period.

Office fit-out activity compared with one month ago

■ As was the case in May, office fit-out activity decreased during June. Having eased slightly since the prior month, the rate of contraction was marginal.

■ This was indicated by the net balance rising from -4.5% in May to -3.9%.

Summary of activity in June

■ The UK commercial property sector recorded a renewed drop in activity during June, with the headline net balance falling from +1.0% in May to -3.3%.

■ The downturn was driven by a sharp and accelerated contraction in public projects, as private work continued to rise.

■ Industrial/warehouse was the only category of the nine monitored types of commercial activity to record growth.

■ The quickest decline was seen for public new build work.

Regional commercial activity compared with one month ago

■ Commercial activity fell in London, but increased in the South East and the ‘Rest of UK’ during June.

■ The contraction in London was the second in consecutive months. However, the rate of decrease eased as indicated by the net balance rising from -10.2% in May to -8.3%.

■ The South East registered a marginal expansion in activity, with the net balance up from -17.9% to +1.6%.

■ Growth in the ‘Rest of UK’ softened to the joint-slowest in the current 47-month period of expansion.