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The London office market revival has been eagerly anticipated after a decade-long lull. Expectations were raised last year that activity would return on the back of improving share prices and a pick-up in the general economy. But rather than returning with a bang, the comeback has been rather more modest. A director at one major developer sums up the present feeling: "Our view is that it's coming back but it's not moving as fast as the agents are saying it is. People are taking space but not at a speed which people believed they would earlier this year."

For the construction industry, which is in the midst of continuing booms in the public sector and residential markets, this is something of a relief. "Resources are stretched to the limit, even without the office market being there," says Richard Clare, chairman of cost consultant EC Harris.

While memories of the dotcom crash of 2000 and 2001 still linger, there is an understandable note of conservatism among the funders of office schemes. "I don't think it will get back to the dizzy heights of the late 1990s. It was too much of a bubble then," says Steve Elliott, managing director of fit-out contractor Overbury. Hence the scarcity of speculative office schemes in the London pipeline so far. Kevin Arnold, partner at QS Gardiner & Theobald, detects a a mood of caution among developers and funders of big office projects. "People are very cautious about inflating the projected rents and often inflate the construction costs,"he says. Many consultants and contractors now see 2006 and 2007 as the years when the office market will really be back.

A survey from property consultant CB Richard Ellis for the first quarter of 2004, points to a slow but sustained recovery following on from better market conditions recorded at the end of last year. It records good take-up of office space (232,250 m²) and a fall in supply for the second successive quarter across the capital. "Coupled with increasingly favourable economic and survey-based measures for London, the recovery momentum appears sustainable," it concludes.

And there are signs of more activity to come. The start of the year saw insurance firm Willis sign a 25-year lease with British Land to occupy a 24-storey building in Lime Street opposite the Lloyd's building in the City. The lease for the Foster and Partners-designed building, which will be built by Mace, was the biggest in the City for 18 months. Another green shoot emerged with a big speculative office scheme in January. Prudential put out a 拢45m refurbishment of a grade II-listed building on Finsbury Circus, near Liverpool Street Station to contractors, with Bovis Lend Lease in line to win the contract.

Vince Clancy, director at QS and project manager Turner & Townsend, claims there is more demand in the City. Major law firms are renewing their interest in the office market, which is considered by many experts as a sign that general pick-up is around the corner. Two such firms, Norton Rose and Lawrence Rose, are understood to be interested in two office blocks planned on developer More London's site in Southwark, next to City Hall.

So optimism, however cautious, is still there. Overbury's Elliott says that his firm has enjoyed its second best year in the last six years and has secured 拢20m of work for next year. "That's very unusual for us as we usually work on three-to-four-month cycles," he says. "Confidence is coming back as people are willing to commit longer ahead. The market is back, and back stronger."