Savills survey of commercial developers shows first downturn in three months after dramatic cut in public sector spending

UK commercial development fell in June for the first time in three months after a sharp drop in public sector activity, new data from Savills has shown.

Responding to a Savills questionnaire, around 22% of commercial developers reported a drop in overall activity last month, with only 19% reporting a rise.

The resultant net balance – the Savills Total Commercial Development Activity Index – posted -2.8% for June, its worst score in 11 months.

Public commercial development activity showed a net balance of -28.6%, the sector’s fourth consecutive monthly fall.

The lowest levels of June public sector activity were in office developments, showing results of -30% on the Index.

Public new builds posted -19.6%, whilst retail and leisure developments were down -18.2%.

The Index was boosted by strong results from the private sector, which enjoyed its eleventh consecutive month of growth with a June net balance of +10.6%.

Michael Pillow, head of building consultancy at Savills, said: “Public sector austerity measures are now firmly impacting on the development market, with development activity for public sector clients now in double-dip territory. Thankfully the slack is being taken up by continuing growth in the private sector.”