Commercial development activity continued to slow across the UK in September as tenant demand fell, according to research by Savills.

In its commercial development activity report, the firm said that of the approximately 200 companies surveyed, only 7% reported an increase in activity last month, compared with 48% which reported a fall in activity.

As a result, its Total Commercial Development Activity Index recorded a -40.7% net balance – the lowest since the index was created in March 2003.

The report said ‘business sentiment dropped to a new series record low in September, as developers anticipate that recent global financial turmoil will further restrict credit availability and reduce tenant demand.’

According to Savills, respondents were most pessimistic about the performance of the office, retail and leisure markets over the next three months. Industrial and warehouse property will fare slightly better but will still remain ‘inside negative territory.

Mat Oakley, head of Savills research said: ‘While the recent actions of the treasury and the monetary policy committee are by no means a panacea to developer’s current problems, they are small steps in the right direction. We expect the funding environment to improve in 2009, however development finance will remain hard to obtain.'