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Landsec has said it won鈥檛 start any speculative London office schemes until it has signed up tenants on two schemes it is due to finish next year.

The developer has already said it is scaling back the amount of office work it carries out, having unveiled plans earlier this spring for a 拢2bn sell-off of parts of its office-led assets over the next five years to fund an expansion into residential.

In its latest annual results for the year to March 2025, published at the end of last week, the firm said: 鈥淲hilst demand for [office] space remains good, the build cost inflation over the past few years, continued challenges in supply chains and higher exit yields have put pressure on development returns, despite growing rents.

鈥淭his impacts office development more than residential, so we continue to carefully weigh risks and returns on any new schemes, but in any case, we do not plan to commit to any new speculative London office projects until we have secured the majority of the 拢61m ERV [estimated rental value] on our existing projects.鈥�

The firm鈥檚 two committed office jobs in the capital are Thirty High, a 拢380m scheme to refurbish a 1960s office block called Portland House in London鈥檚 Victoria, which is being built by McLaren, and the 拢400m Timber Square scheme being completed by Mace.

Landsec said completion at Thirty High 鈥渉as moved out a few months but costs remain in line with expectations鈥� while it has added clubrooms to the original design at Timber Square.

It added: 鈥淸Both] developments are expected to complete over the next 12 months and we are starting to see good customer interest emerge. We expect this will translate into progress on pre-lets in the second half of the year for both schemes, as high-quality, sustainable office space in locations with good transport connectivity and attractive amenities remains in scarce supply. However, as both schemes are designed to be multi-let, the majority of lease-up is expected to occur post completion.鈥�

Among the schemes given potential start dates of next year by Landsec in last week鈥檚 results are the 拢250m Hill House job, which Skanska won over a year ago, Red Lion Court, a 拢200m office scheme on Bankside which has been paused with Mace understood to be the frontrunner, and 55 Old Broad Street where Keltbray has recently put up site hoardings.

In its annual results last year, Landsec gave potential start dates for Red Lion Court as the second half of last year while Old Broad Street was given this year. Hill House has remained unchanged with a potential start date of 2026.

Last week, Landsec said it would fund its move towards housing by rotating 拢3bn of capital out of 鈥渙ffices, non-core investments and low or non-yielding pre-development assets鈥�.

Regarding offices specifically, Landsec said it aimed to reduce its capital employed in the sector by 拢2bn over two to five years.