In a sign that the market for new office space in London is topping out, the UK's largest listed property developer Land Securities said it will now only start building new commercial space if it has been let before work has even started.
Demand for offices is on the rise as the UK economy recovers and businesses become increasingly confident. It is expected to rise further as firms invest in expanding their operations and take on more staff.
Among developments in London by Land Securities is 20 Fenchurch Street, known colloquially as the Walkie Talkie, which has a valuation surplus of £137.2m and is 87% let.
"In London, our building programme will continue apace as we seek to maximise the benefits from favourable market conditions, though any additional commitments in the near term will require pre-lets," said Robert Noel, chief executive of Land Securities.
"We expect to see a shortage of Grade A space until at least late 2016. The market balance beyond that will depend on the general development response to improving market conditions."
The statement from Land Securities in a trading update follows a report from rival developer British Land that it has £1.3bn invested in commercial property projects across London and the south east.