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When Jacques Attali, the first president of the European Bank for Reconstruction and Development, visited London in 1990 to consider options for its headquarters, urban legend suggests he took one look at the Canary Wharf site favoured by the UK government and issued a decisive “non”.
How times change. After rejecting the Thatcherite project to regenerate London’s Docklands then, the EBRD last year left its City site to take up residence in Five Bank Street in the Wharf. The concern is that, as companies react to post-Covid changes in working, more occupiers are heading the other way.
HSBC said this week that it will leave its Canary Wharf skyscraper and move to a 550,000 sq ft building in the Square Mile, London’s traditional financial centre. Not only is HSBC vacating its high-profile tower, it is roughly halving its office space. The bank will follow others, like law firm Clifford Chance which is significantly cutting office space in a move to the City in 2028.
This is a new version of an old problem. The stereotype of a sterile, soulless office park lingers long in the corporate memory. Docklands is now well connected to the City and beyond; the new Elizabeth line has provided a swift route to Heathrow. However it is seen as a cheaper but less desirable office location.
The staying power of flexible working accounts for part of the downsizing trend among core financial occupiers. Rising automation also means banks no longer need the vast floor-plates that gave Docklands its edge over older City buildings. The proliferation of City tower blocks offers occupiers seeking top-grade, sustainable offices more choice. Needing less space, they can tolerate higher rents.
Canary Wharf is not alone in facing this pressure, nor is it unprepared. Paris’s La Défense, Europe’s largest office development and another place tagged as unappealing, has vacancy rates approaching 16 per cent, according to property agent Savills, on a par with Canary Wharf’s. Both far exceed the traditional central business districts, with vacancy rates in central Paris falling below 3 per cent. The New York market is struggling, with vacancy above 20 per cent in Manhattan and its satellites overlooking the Hudson river from New Jersey. Around Europe, from Amsterdam to Munich, fringe locations have lost out to established centres since the pandemic.
This will test cities’ ability to rejuvenate areas that languish. La Défense plans more residential buildings, restaurants and urban parks. Canary Wharf has shifted away from its traditional bank-heavy mix: financial services tenants make up 55 per cent of tenants compared to 70 per cent a decade ago. The group has joined forces with the Eden Project to revamp public spaces, is adding leisure facilities and the estate has 3,500 residents compared to none three years ago. There are plans for more housing, and a primary school, as well as a new life sciences quarter on North Quay.
Transformation isn’t pain-free: office values have to fall to make conversions to residential or laboratory space feasible. But Canary Wharf’s shops and events programme make it more of a week-round destination than often thought. Its underground station regularly gets half to three-quarters of its midweek peak traffic on a Saturday, transport data shows. Despite the City of London Corporation’s attempts to boost weekend appeal, Bank station struggles to get over a quarter.
The departure of suited professionals adds pressure to Canary Wharf’s ambition to become a more diverse, thriving hub. But the district that rose from the ruins of the East End’s abandoned docks has already started its reinvention.
