Commercial construction bounces back

The commercial property sector has sprung into life in September following a slow August. Commercial construction companies have reported a sharp rise in activity during the month in the latest survey by property agent Savills.

Growth in the commercial market was stronger in the private sector, although both private and public sectors have stepped up the pace in the past month.

Expansion was seen in all nine areas of commercial activity monitored by Savills, including offices, industrial, and leisure.

Mat Oakley, head of Savills’ commercial research department, said the survey proved that August has been “a seasonal blip”.

“With private sector office construction having increased for the thirty-seventh consecutive month, it is no surprise that developers' optimism about the prospects for this sector cooled a little,” he said.

The Savills Total Comercial Activity Index hit 59.3 in September, up from 56.3 in August.

Public sector activity grew at the sharpest rate for six months in September, the survey found. More than three times as many panel members (16%) reported a rise in public sector development, compared to those that reported a fall (5%).

Private sector activity increased for a ninth consecutive month. The rate of expansion was above the survey's long-run average and more marked than for public sector development activity.

Industrial/warehouse activity saw accelerated growth in September, performing well above August's 14-month low.

High levels of activity were also seen in the office fit-out market and work on private sector office projects.

Public sector retail & leisure also showed a solid rise in activity following a marginal decline in August.

The findings were published today in Savills' PMI Commercial Development Activity report, September 2006.