Landsec to reduce capital spending to just £200m by middle of next year as firm cuts back on office jobs

Landsec has said the amount of money it plans to spend on capital expenditure will come down from £1bn to just £200m by the middle of next year.

In September, the developer flagged that it did not plan to commit “any meaningful” capital to new office development in the near term but in its interim results this morning, the firm spelt out what that would look like.

Mace is due to complete Landsec’s Timber Square scheme in Southwark next March while McLaren is due to wrap up the Thirty High project, which involves refurbishing the former 1960s office block in Victoria called Portland House, next June – which the developer said was several months late because of unspecified delays.

It said: “As our two on-site London office projects complete in the next nine months, committed development will reduce to c. £0.2bn by mid next year. We do not intend to add meaningfully to this in the next 12-18 months, as we will prioritise acquisition opportunities in retail, and we also intend to move to a structurally lower level of capital employed in development beyond that.”

It added: “At present, we believe returns for new office and residential development are less attractive than new acquisitions of major retail destinations, so we do not plan to commit any meaningful balance sheet capital to new development in the next 12-18 months.”

Several London office schemes have been stalled in the wake of Landsec’s rethink including 55 Old Broad Street and Hill House – both of which are due to be built by Skanska.

While Hill House remains paused, Building understands work on 55 Old Broad Street could start next year with Landsec’s update this morning suggesting work could begin at some point in 2026. Over the summer, Keltbray completed the building wrap ahead of demolition but the site has remained empty since.

The developer is understood to be looking at deals to offload some of its yet-to-start office schemes, similar to its disposal of Red Lion Court on London’s Bankside in September to a Stanhope team. Mace is set to start work on the £200m scheme early next year.

Meanwhile, Landsec said it was pushing on with its office schemes in Manchester and added: “As supply of new office space in Manchester is limited, we are already seeing positive early engagement with prospective customers significantly ahead of the 2028 completion.” Bowmer & Kirkland began work on the first block at Landsec’s Mayfield development next door to the city’s Piccadilly train station.

But Landsec said it was hitting the pause button on several residential schemes, including nearly 900 homes it plans to build at the Mayfield scheme. Residential jobs at Lewisham and Finchley Road, both in London, as well as MediaCity in Salford, are also on hold, with the number of homes covered by the four projects totalling 9,000.

Landsec admitted: “We could see first starts on site in 2027, taking into account detailed design works, Building Safety Act approvals, and site preparation. However, returns currently are not at sufficient levels which is an issue across the wider market, as highlighted by the fact that new housing starts in London fell to 3,248 over the first nine months of 2025, which is down c75% over the last three years.”

It said a series of government measures, including a reduction in affordable housing requirements and the Community Infrastructure Levy as well as relaxed design requirements, “could lead to an improved outlook for residential development returns in 12-18 months but in the meantime capex spend will be very limited”.