The largest office landlords in London faced unprecedented situation: political risks may send commercial real estate market in opposite direction, Bloomberg writes.

Such developers as Land Securities Group Plc, British Land Co. and Great Portland Estates Plc are trying to handle uncertainty related to Brexit by reducing debt, postponing new large projects and cutting expenses on existing ones.

It is obvious that investments in large office real estate are now too risky. However, if the UK manages to exit EU without significant harm, the companies that do not have any projects in reserve will miss years of profitable growth.

This is why the main dilemma for office REITs is to build or not to build? Land Securities, the largest real estate investment trust, stopped building four years ago to fill existing capacities with long term leases first and to prevent market oversupply.

British Land, second largest office REIT in London took more risky approach. Company has large new projects started in recent years. Besides, it divested two most valuable office buildings in London as foreign investors, attracted by cheaper pound are ready to pay more. The company however does not ignore Brexit risks. Instead of developing project related to UBS office building that was emptied in 2016, it decided to rent to short term tenants.

Careful approach did not save stocks REITs from falling. Most developers in London are traded with significant discount to the value of its assets. It means that they will continue having difficulties with developing new projects.