Land Securities (Landsec) has two London office developments under construction, in Victoria and Southwark, and these are expected to complete over the next 12 months.
However, it said today that it will not commit to any new speculative London office projects until it has secured the majority of the £61m estimated rental value (ERV).
“We are seeing encouraging customer interest in this space emerge and although it will take time to lease-up as these are multi-let buildings, they should add £7m to earnings once fully let,” the company said. “We will not start any new speculative office-led projects until the expected income on these projects is substantially de-risked.”
Landsec said that, while demand for space remains good, 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.
“This 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 £61m ERV on our existing projects,” it reiterated.
It will focus instead on other types of developments.
Chief executive Mark Allan said: “We have set out a clear plan to increase investment in major retail by a further £1bn and establish a £2bn+ residential platform by 2030, to be funded by rotating £3bn of capital out of offices, non-core investments and low or non-yielding pre-development assets. Delivering on this strategy, whilst continuing to drive sustainable income and EPS growth, is our priority and we are firmly under way.”
The strategy was revealed as the company posted financial results fpr the year to 31st March 2025, showing a pre-tax profit of £393m, bouncing back from the previous year’s loss of £341m.
Landsec has already assembled a sizeable residential pipeline, ahead of first potential starts in late 2026.
It has started on site with infrastructure works, secured vacant possession and completed demolition for first phase of a consented 1,800-homes scheme on Finchley Road in London.
It has renegotiated a development agreement at Mayfield in Manchester, unlocking an option to deliver 1,700 homes from 2026 onwards.
It has submitted a planning application for a 2,800-home masterplan masterplan in Lewisham, London.