Latest data from a survey conducted by Savills pointed to a seasonal slowdown in growth of commercial development activity in December. Developers reported that overall activity on both public and private sector projects was unchanged in December from a month earlier, which meant that total commercial activity failed to post an improvement for the first time since May 2003.

While the headline numbers indicated little change in activity levels at the year end, data on detailed areas of commercial activity were more positive. In December, growth was reported for all nine areas of activity on which developers are questioned, with expansion strongest for industrial/warehouse activity.

The latest survey also provided positive findings on developers’ expectations for activity levels in 2006. Optimism regarding activity levels through Q1 rose to its highest since February, as work on new office, industrial and retail developments was scheduled to begin.

Commenting on the survey, Mat Oakley, head of Savills’ Commercial Research department said: "With a third of all developers expecting to see an increase in office development starts in the first quarter of 2006, it is clear that the recovery in the leasing market is driving a new sense of optimism amongst developers. We expect office development activity to accelerate gently throughout 2006, leading to a rush of completions in two to three years time."