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The commercial market is in a rosy state, says the latest report by Savills Commercial Development PMI. According to the report, the rate of growth in the office fit-out sector has substantially topped the rest of the commercial market this month.

Head of commercial research, Mat Oakley 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."

Savills reported substantial market increase in activity in all nine broad areas of development in the commercial market. Most importantly, it found the sharpest rise to be in the office fit-out sector, with the index of activity posted at 62.1, a substantial increase from the 59.8 recorded in the last three months.

Although levels of activity in the commercial developers market were recorded to be higher in the last five months, Savills admitted that it was in fact the lowest reported this year.

Oakley warned: "Too many speculative developments starts over the next two years could store problems for later in the cycle."