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Commercial sector records strongest growth since May 2007

Commercial property sector activity is at a peak not seen since May 2007, property firm Savills has said.

The balance between respondents reporting more or less activity stood at +20.1 per cent, up from +18.9 in June.

Both private and public new-build activity in the sector rose in July, with respective net balances of +25.9 per cent and +1.4 per cent. Growth in private new-build work was the strongest recorded since May 2007.

Commercial developers told Savills they were optimistic about the prospects for the sector over the coming quarter, with a balance of +25.1 per cent viewing the outlook positively, against +14 per cent in June.

Positive sentiment was linked to improving client confidence, better weather conditions, higher enquiry numbers and increased availability of bank financing.

Savills director of building consultancy Michael Pillow said: “The sharp rise in confidence bodes well for development activity in the second half of the year.

“Developers will continue to be restrained by lack of debt but this should ensure a sustainable recovery.”

Within the overall commercial sector the sharp rise in industrial and warehouse activity in July breached a record for the survey, increasing from +26.3 per cent to +32.6 per cent.

The net balance for private office activity was +30.8 per cent in July, the strongest increase in more than nine years.

Retail and leisure activity showed a marginal reduction in the public sector. The net balance for private retail and leisure work fell slightly from +14.3 per cent in June to +12.2 per cent in July, but was “consistent with a solid expansion nevertheless”, Savills said.

Both office fit-outs and refurbishment work also rose strongly.

Savills divides its results into London, the South-east and the rest of the UK.

For the 11th month running, commercial activity rose across all three categories, most rapidly in London at 31.6 per cent, followed by the rest of the UK on 30.9 per cent – a 75-month high – and the South-east at 28.2 per cent.

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