Commercial property downturn deepened in September as global credit crisis continued to affect funding.

• September data pointed to another difficult month for the commercial property sector, with development activity hit by reduced bank lending and the weak economic outlook.
• Just 7% of survey respondents reported a rise in activity, compared to 48% that indicated a fall. At -40.7%, the resultant net balance – the Total Commercial Development Activity Index – was the lowest since the survey began in March 2003.
• The latest survey pointed to particular weakness in the office development sector, reflecting concerns about tenant demand and deteriorating conditions in the wider UK economy.

Future Expectations

• Business sentiment dropped to a new series record low in September, as developers anticipate that recent global financial market turmoil will further restrict credit availability and reduce tenant demand.
• Data indicated that firms were most pessimistic about the prospects for office and retail & leisure development projects.
• The three-month outlook for industrial/warehouse development improved slightly from August’s low, but remained well inside negative territory.

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