Forecasts of office development in the City of London have almost halved during the past 12 months in the expectation that developers will review plans amid a worsening occupier market and stagnant financing conditions.

CB Richard Ellis and Jones Lang LaSalle, the two largest property agents operating in the City market, have downgraded their forecasts for City development significantly to take account of the shift in confidence among developers in London. So far, no developers have said that they will stop their building programmes but agents say that certain schemes are likely to be delayed, with initial ground work already taking longer than expected.

CB Richard Ellis now expects about 6.3m sq ft to be built in the City between 2009 and 2011, a significant reduction from the 13.5m sq ft that it expected to be built during the period this time last year.

Jones Lang LaSalle, meanwhile, predicts that the maximum potential pipeline for 2008-11 fell by 17 per cent last year.

The agent’s development expectation for 2011 has more than halved in the past 12 months because it be-lieves that those not already on site are far less likely to start.

Neil Prime, head of Jones Lang LaSalle’s City office, said: “The combination of impossible-to-get speculative funding, rising construction costs and uncertainty in the occupier market has meant that there are few willing to put a shovel in the ground right now.”

Kevin McCauley, director of CBRE, said: “Ironically, we were seeing construction starts pick up at this time last year.” Mr McCauley said that the debt crisis had had a profound effect on development through its impact on financing, end-value expectations and occupier demand.

Land Securities said in its most recent interim statement that it would look to reduce the risk from development of the so-called “walkie-talkie” building at 20 Fenchurch, which could include waiting for a letting or seeking third-party money, depending on market conditions. British Land has been more bullish, declaring its intent to carry on with its big speculative tower at Leadenhall street.

Other developers such as Minerva, Gerald Ronson’s Heron and Hines, are committed to their City schemes, while two of the largest towers – the Shard at London Bridge and the Pinnacle at Bishopsgate – have also been given public backing by their developers.

Agents are reporting that landlords are already accepting less than their stated rents on certain buildings in the City, the first sign that the occupier market may be weakening.

One agent, who asked not be named, said that certain new buildings on Cheapside were likely to accept lower rents than publicly stated. “The past two months have seen landlords alter their expectations,” he said, pointing to predictions of as many as 10,000 job losses in the Square Mile.

This comes after a period of rental growth in the financial district, with rents for prime buildings now on average about £62.50 per sq ft.

There had been hopes that rents in the City market might reach more than £70 per sq ft this year before the credit crisis hit last year.