Commercial sector grows again, with fastest expansion in the UK regions

Office building

Fast expansion in the regions helped the UK commercial sector expand again in May, according to the latest Savills Total Commercial Development Activity Index.

On balance 26.9% of developers saw an increase in commercial activity in May, up from 23.6% in April, with expansion fastest outside the south-east, according to Savills.

Savills said the increase was consistent with a “marked pace of growth” for the commercial sector.

This stronger increase was reflected across both the private and public commercial projects, with net balances rising from +35.3% and +1.6%, to +37.8% and +10.3% respectively.

The index also shows that UK commercial developers remained optimistic regarding future commercial activity, albeit positive sentiment slipped from April’s three-month high of +35.2% to +24.8% in May.

Improving client confidence, better economic conditions and increased availability of finance were cited by panellists as factors expected to support growth of commercial activity in three months’ time.

The monthly questionnaire of leading developers and contractors also showed that all three UK regions posted growth of commercial activity in May, continuing the trend seen since September 2012.

The sharpest expansion was recorded in the ‘Rest of UK’, followed by the South East and London respectively. Net balances registered were +28.0% for London, +28.1% for the South East and +32.7% for the ‘Rest of UK’.

Within specific sectors, all nine broad areas of the commercial property sector recorded growth.

Despite a softening from April’s recent record to the weakest in six months, Savills said the growth in private office activity continued to rise in May.

Public office activity grew in May but only marginally, the index showed. Retail & leisure saw increases in the level of both private and public work, +3.4% and +22.8% respectively.

UKGrowth of office fit-out activity quickened to the strongest in four months during May with a net balance of +18.8% of panellists recording higher office fit-out work, compared with +16.0% in April.