Savills' data for May shows smallest contraction in development activity for 18 months

Contraction in the commercial market last month decelerated to its slowest rate since the start of the downturn, according to new data from Savills.

The firm's monthly survey indicated that May saw the slowest overall reduction in commercial development activity since November 2007.

Around 22% of those surveyed reported a drop in activity since April, compared with 18% reporting a rise. That brought the commercial development activity index to -4%, up from -8.9% in the previous month. It is the sixth consecutive month to see slower falls in activity.

Public sector office activity saw the greatest improvement, with the index registering its strongest reading since July 2007, with a growth in activity of 3.8%. Retail and leisure and new build were the worst-performing areas.

Building site
Public sector office activity saw the greatest improvement

Head of Savill's commercial research department, Mat Oakley, said: “With an increasing number of developers reporting improving levels of business, and the outlook showing a positive balance for the first time since 2007, it is clear that the green shoots of the recovery have made it through the late spring frosts.

“There are still considerable challenges ahead. However, we believe that the environment for developers in 2010 and beyond is looking increasingly fertile.”