■ Eight of the nine sectors tracked saw further declines, the exception being private new build which rebounded during the month. The fastest drop was again noted for public retail & leisure projects.

^{Source: Markit, Savills Research}

Future Expectations

■ As has been the case since June, commercial developers across the UK were downbeat regarding the three-month outlook for activity. The net balance posted -4.0% in August.

■ Where negative sentiment was signalled, there were mentions of market uncertainty following the UK’s decision to leave the EU.

■ Panellists foresee falls in office projects and retail & leisure work, while industrial/warehouse activity is expected to increase.

^{Source: Markit, Savills Research}

Commercial Activity and UK Economy

■ The chart below shows the Savills Total Activity Index against the UK Construction PMI^®.

■ At 49.2 in August, the PMI^® registered below the 50.0 no-change threshold for the third consecutive month.

■ However, the index was up from July’s 85-month low (45.9), and signalled the slowest pace of decline since the downturn began in June.

■ Sub-sector data pointed to slower reductions in housing activity and commercial building, while civil engineering work stabilised.

^{Source: Markit, Savills Research}

Total level of commercial activity

compared with one month ago

■ Commercial development activity in the UK declined for the third straight month in August, as indicated by the net balance posting -3.5%.

■ However, with growth of private projects resuming and the downturn in public work softening, the overall rate of contraction eased from July’s recent record.

Office activity

compared with one month ago

■ Private office activity contracted for the fifth straight month in August, but at a weaker rate. The respective net balance rose from July’s 57-month low of -18.1% to -6.3%.

■ Public office projects also fell at a slower pace, with the net balance up to -17.2% from -27.8% in July. The latest reading was still consistent with a sharp rate of reduction, however.

Retail & leisure activity

compared with one month ago

■ August data pointed to a third successive monthly drop in private retail & leisure work. That said, the pace of reduction eased noticeably from July’s 89-month record.

■ Although steep, the rate of contraction in public retail & leisure projects also softened. The net balance rose from -32.0% to -23.6%.

New build activity

compared with one month ago

■ UK commercial developers saw a rebound in private new build work during August. However, the rate of expansion was only marginal as indicated by the net balance posting +5.0%.

■ Conversely, public new build projects declined again. The rate of contraction accelerated to the sharpest in four years.

Industrial/warehouse activity

compared with one month ago

■ August data pointed to a back-to-back decline in industrial/warehouse activity in the UK.

■ Falling from -8.3% in July to -12.8%, the net balance indicated the sharpest rate of reduction since early-2009.

Refurbishment activity

compared with one month ago

■ As was the case in July, UK commercial developers signalled lower levels of refurbishment projects in August.

■ The rate of reduction softened, however, as highlighted by the respective net balance rising from -10.7% in July to -3.6%.

Office fit-out activity

compared with one month ago

■ Office fit-out projects across the UK commercial property sector decreased for the fourth month running in August.

■ That said, the rate of contraction eased and was moderate overall. The net balance was at -6.8% (July: -16.2%).

Summary of activity in July

■ For the third straight month, commercial activity across the UK decreased in August, but the rate of contraction softened.

■ The net balance rose from July’s 89-month low of -18.0% to -3.5%. This was supported by a slower drop in public work as well as a rebound in private activity.

■ Declines were seen in eight of the nine types of activity monitored, the exception being private new build projects.

■ The sharpest contraction was, once again, noted for public retail & leisure.

Regional commercial activity

compared with one month ago

■ Two of the three monitored UK regions recorded lower levels of commercial activity in August.

■ The ‘Rest of UK’ was the exception and posted growth, with the net balance rising from -11.0% in July to +3.4%.

■ London saw a slower contraction than in the previous month, as indicated by the net balance increasing from -20.9% to -12.5%.

■ The South East also registered a softer downturn, with August’s net balance of -7.6% being above its respective three-month average (-8.7%).