(Bloomberg) -- Swedish construction group Skanska AB is putting its growth ambitions for commercial property development in the US on ice as demand has been hampered by the tepid number of workers returning to the offices.

“There’s a big hesitation among tenants to expand or sign up for new space,” Executive Vice President Claes Larsson said during a webcast presentation on Wednesday. “We’re lagging behind in leasing compared to what was assumed when we started a lot of the projects.” 

His comments come a day after the Stockholm-based company took a 2 billion kronor ($195 million) asset writedown due to weak markets, primarily in the US portfolio. The hardest hit segment has been offices, where the leasing segment has suffered from “very low” return-to-office rates in the wake of the Covid-19 pandemic, according to Larsson.

Skanska like many other builders continues to grapple with softer demand for new housing and increased construction costs. The company has previously warned of weaker conditions in all of its commercial property development markets, which comprise the Nordic region, Europe and the US.

Larsson says the company is now “extremely cautious” on starting new projects in the US due to the uncertainty. Shares dropped as much as 4.3% in Stockholm on Wednesday. 

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