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LandSec slows down schemes as high costs hit

The developer said it will only commit to early works worth £55m on Timber Square in SE1 and the refurbishment of Portland House in SW1 which have a combined total development cost of £780m.

Landsec bosses believe the rise in construction and finance costs could see new development starts drop by between 30% and 90% over the next 12 months.

They added: “As such, we think this could create an attractive window to deliver new space in 2025, when new supply of Grade A space is likely to be low.”

Landsec said:”For London, we plan to let early works packages on two office schemes with a total cost of £55m, which will allow us to maintain programme for delivery in what we expect to be a very supply-constrained market in 2025, whilst buying an extra 6-9 months of time before we have to commit to a full development.”

Laing O’Rourke was appointed main contractor for the Timber Square scheme back in 2020 before it was originally put on hold by the pandemic while Mace is lined-up for Portland House.

Landsec added: “We are confident that the quality of our future pipeline and its sustainability credentials is well positioned for future demand, but are mindful that in periods of economic uncertainty demand can be cyclical. In the near term, we are therefore focused on maintaining optionality.”

Latest results for the half year ended 30 September 2022 revealed a £192m loss compared to a pre-tax profit of £275m last time.