Plans for more than eight million sq ft of speculative office buildings, including a clutch of skyscrapers, could be shelved as the financial sector retrenches and cuts its demand for space in the City of London.

The impact of the credit crunch on financial institutions, the City’s biggest employers, is blamed for the sudden drop in demand and developers are reigning-in plans for space equivalent to more than a hundred football pitches after four years of increasingly ambitious construction.

British Land confirmed yesterday that it would delay the so-called Cheesegrater, a 225 m (740 ft) high tower on Leadenhall Street, in the hope that its completion would coincide with the peak of the next commercial property cycle. Other developers are expected to delay projects scheduled to start in the next 18 months at least until they have found prelet tenants.

Hammerson said that it would not start any big developments before next summer. Last month, it lost JPMorgan as a tenant for St Alphage House, on Fore Street, its proposed 900,000 sq ft development, after fierce competition from Canary Wharf to house the bank. Hammerson also has proposed developments totalling more than one million sq ft near Shoreditch High Street, to the north of the City, which now look doubtful.

Land Securities may also postpone its so-called Walkie-Talkie Tower at 20 Fenchurch Street, due to be completed in the autumn of 2011.

According to City analysts, as much as 8.4 million sq ft of planned speculative office development could now be shelved or at least postponed and 3.5 million sq ft has a question mark over it. The downturn in the financial sector has coincided with more speculative space than ever coming on to the City office market. About 3.26 million sq ft of new unlet space is due to be completed this year, while several hundred thousand square feet of “grey space” - let, but still empty - is expected to be put back on the market.

British Land said that it intends to complete the Richard Rogers-designed Cheesegrater in 2012, a year later than originally planned. Work on the foundations will continue, but the company will delay finding a construction contractor in the hope that it can take advantage of an anticipated fall in commodity prices and hammer out a tough deal. Stephen Hester, chief executive, said: “Steel futures and energy prices are coming down from their peak and if we deliver the building later we hope it will be launched into the peak of the next upturn for City rents.”

Mr Hester said that property values were likely to continue to fall for at least the rest of this year and that rents would deteriorate further. But he insisted that British Land’s assets were resilient and would “see out many economic cycles with a dependability few businesses can match”.

British Land, the owner of Meadowhall shopping centre in Sheffield, reported a 5 per cent fall in the value of its property portfolio in the three months to the end of June.

Net assets fell to £6.3 billion and the net asset value per share dropped by 10 per cent to £12.12 in the quarter. Shares in the company ended the day unchanged at 722p as analysts noted the solid operational performance with like-for-like rental growth of 6.3 per cent, compared with an industry average of 3.3 per cent.

The biggest fall in value came in the office sector, down 10 per cent, but retail properties fell by only 3.8 per cent. Rental growth was achieved in the retail sector, but not for offices.

British Land described investment markets as “thin, nervous and negative in tone”. It said that substantial capital was waiting on the sidelines but it would be spent only when investors perceived “cheap” opportunities.

With a rise in underlying pretax profit of 23 per cent to £74 million, the dividend was lifted 7 per cent to 9.375p.

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