The latest data from estate agents Savills shows a record rate of decline in both the private and public sector.
Data from August also indicated a month-on-month reduction of total activity at 42% of commercial developers. The report says that commercial property developers remain highly pessimistic about the future because of 'unfavourable bank lending conditions' and a 'widening domestic downturn'.
'The overall degree of negative sentiment was the most marked in the survey history, with pessimism broad based across all areas of activity,' it says.
Looking ahead analysts don't see a quick upturn. 'As the consensus for the economic outlook becomes even more negative so has the developer's view of prospects for the future. We remain of the view that the impending downward movement in the base rate will lead to a pick up in optimism and eventually development activity,' said Mat Oakley, head of Savill's Commercial Research Department.
But the report comes at a time when the European Commission is predicting that the UK, Germany and Spain will be in recession by the end of this year.
According to the body, the UK economy will shrink by 0.2% in the last two quarters of the year, technically putting the country into recession which is commonly defined as two successive quarters of negative growth.
The commission also lowered its expectations for growth in the eurozone from 1.7% to 1.3% across the whole of 2008. A similar warning was issued by Paris-based think tank the OECD last week.
