Commercial development keeps rising despite slump in public work

Commercial development activity rose by 4.1% in May, according to the latest monthly figures from Savills, but this growth was entirely driven by the private sector.

The firm’s latest commercial development activity index shows that public sector activity fell at the fastest pace since January, dropping 13% while private grew 14%.

Around 22% of commercial developers reported an increase in total activity in May, and 18% a reduction. The resulting balance of +4.1% was similar to April’s +4.0% but below the long-run series average of +5.4%.

An increase in total commercial development has now been recorded for three of the past four months.

Activity increased in five of the nine broad categories of development activity, with the fastest rate of expansion in private new build. Public sector new build was the weakest sector.

Confidence fell slightly, with the net balance of developers expecting an improvement in activity over the next three months dropping to +8.6% in May from +18.1% in April, but remained positive for the 10th consecutive month.

Developers showed the greatest optimistic about the industrial and warehouse sector. However, confidence in office and retail and leisure development fell between April and May, driven by worries about public spending cuts.