Good times will be over by the time towers are up

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Some time in early autumn Legal & General will move out of Bucklersbury House and the bulldozers will move in to demolish what is probably the last iconic Sixties building in the City a vast pile stretching from Queen Victoria Street to Cannon Street and is certainly the biggest single development in the area since Broadgate almost 20 years ago. Few of those who have worked there will lament its passing, but rather more might wonder where tenants will be found to fill the similarly vast building which will eventually take its place.

It is a big issue not just for this site, but for dozens of others because the City is in the middle of a development boom. There are cranes everywhere and that is the rub. If history is any guide, developers have a nasty habit of calling the top of the market. They see a boom and start building offices to cater for a continued surge of new tenants. But by the time their buildings have gone through the planning process, been built and come on stream, the boom has passed its peak, so tenants are nowhere to be found and the buildings stand empty.

That is what happened last time there were this many cranes around during the boom of the Eighties. That turned into John Major's recession of 1992/93, when the City was awash with empty space. It could have been empty for years but the IRA solved the problem with the Bishopsgate bomb. That explosion, and another which demolished the Baltic Exchange, destroyed a dozen of the City's major skyscrapers and forced hundreds of businesses to find new premises overnight.

What had been an economic disaster for developers turned into good fortune for the City because it had the empty space. Almost as one, displaced businesses moved into the empty offices.

The previous boom-and-bust had been harder to resolve. The boom was in the late Sixties and the bust came with the fringe bank crisis of 1974. Property companies went bust by the score and took lots of investors and banks with them. It was the end of the decade before the backlog of empty buildings began to clear.

Neither should we forget Canary Wharf, although technically it is not the City. It might have been the most ambitious development in western Europe but it still went bust in the Nineties recession. It is hard to fathom now, but in 1992 you could not give that space away.

Will it be different this time? Well, the reason for the building boom is the same as ever financial markets that were red hot coupled with money that has been cheap to borrow. The potential tenants are the same too: bankers and brokers from around the world and a good smattering of home-grown businesses.

The opposite argument is that finance has always gone in cycles and in a bust firms retrench. It will be a miracle if all those buildings are full from day one. Equally, they will find tenants in the end..