Property giant Hammerson - part of the three-strong alliance behind Birmingham's Bullring shopping centre - has painted a gloomy picture of its UK market after revealing further falls in property values.
The company has also been hit by an easing in City of London rents as banks cut staff numbers because of the credit crunch.
Elsewhere, the firm said although retailers faced weak conditions, it continued to attract firms to major developments in Bristol and Leicester, both of which complete later this year.
Despite this, it added the vacancy rate within the whole of its UK shopping centre and retail park portfolios remained low at 2.6 per cent.
Hammerson said the situation in France, which accounts for nearly 30 per cent of its portfolio, was a little better, although it added that the French office market had softened in the first three months of the year.
In a statement Hammerson said: "The banking sector has remained cautious about advancing new loans, particularly to the commercial real estate sector. As a consequence, activity in real estate markets remains restricted and it is apparent that there have been further declines in UK property values in the first quarter of the year."
The group has six major developments currently under way, which it hopes will boost income by around £73 million a year, with £36 million in annual rent already secured in contracts.
The Bristol and Leicester schemes are 83 per cent and 73 per cent let. In Bristol, the company said it had signed up retailers including House of Fraser and Harvey Nichols, while in Leicester, John Lewis has signed up.
In the office market, Hammerson said its City portfolio was more than 99 per cent let, with the average unexpired lease standing at more than 15 years, but the group said rents were coming down as banking groups were cutting staff amid the credit crisis at a time when development completions are increasing the supply of new space.
Chairman John Nelson said: "We have made good progress in all areas of our business this year.
"We have a strong balance sheet and are well-financed. Hammerson is therefore in a good position to weather the current market uncertainties and take advantage of opportunities that may arise."
Hammerson's portfolio includes 14 major shopping centres, 19 retail parks and eight office properties with a total value of £7.3 billion, as at the end of last year.