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Article Date:	17/07/2006
Article Title:	Growth of commercial property drops but London performs strongly
The growth of the London commercial property market reached a 26 month high in May but activity in the sector as a whole has decreased, research from the international property company from Savills has revealed. According to Savills Commercial Development PMI, the total commercial activity index posted 58.3 in May, down from 60.9 in April. The rate of growth eased last month despite remaining above the survey’s long-term average. Regionally, commercial property developers operating in London recorded the strongest expansion of the total activity, with the rate of growth accelerating to a 26 month high. For the first time in the survey history, the sharpest rate of expansion was reported in office fit-out activity. Mat Oakley, head of Savills’ commercial research department, said: "Commercial development activity in London hit its highest level since 2004 last month. Much of this is probably in the office market. In the context of vacancy rates tumbling and demand recovering this would appear to be a fairly sound strategy. However, too many speculative developments starts over the next two years could store up problems for later in the cycle." Robust rises in commercial construction activity were also recorded in the South East (excluding London) and across the rest of the UK. Panel members remained highly confident regarding the three-month growth outlook. May data indicated that the strongest degree of positive sentiment was for office construction projects.