28 Days Later
Canary Wharf is a marvel, from Michael Heseltine’s dream of The Docklands Development Corporation, to Paul Reichmann’s Olympia & York, who saw a gap in the market with the demise of tired old expensive City infrastructure and a new way finance wanted to extend their trading floors, gyms and vaulting ambition.
The property crash of 1992 and the financial crisis of 2008 did not stymie Canary Wharf’s mushrooming, clinical skyline, and it remains a visible emblem of potential success to residents in adjacent deprived London boroughs who may dream one day of achieving high powered finance roles.
But as coronavirus threatens employees’ bonds to be permanently untied with their workplace, Canary Wharf is facing a critical test.
It faces renewed competition from the City of London Corporation which last week launched a blueprint for a new five-year post pandemic plan to morph the Square Mile into a cultural, residential and innovation led district. The City’s focus is to get smaller businesses, in fintech, data and biotech to occupy a mixed-use footprint, including longer term, lower cost rents for creatives in empty spaces. It’s a well thought out, wide-ranging plan which makes a concerted effort to talk up tackling its environmental footprint, infrastructure including 5G, transport and renewable energy networks, and making the most of its cultural capital.
In contrast, the Wharf is defined by high-rise office buildings, shops and little else. Unlike the City, Canary Wharf has no Barbican, no Museum of London, no Wren churches and its ambitions are inherently commercial. Could this be because its guardians see themselves as primarily asset owners, whereas the Corporation’s role is a custodian of its legacy? While the City can claim to attract mixed-use, the Wharf’s strategy has been to build ever bigger, glass boxes. Its legacy stock is huge and dense, 1m sq. ft buildings with 30,000 sq. ft per floor parcels which have been increasingly difficult to let in the last few years, and now face a fundamental question mark with tenants looking to reduce density and footprint.
The big financial firms which make up more than half of the property portfolio are now expected to cut back their space when leases expire. A fifth of the Wharf’s office leases will come to an end in the next five years. There are currently about 4,000 people working in Canary Wharf, compared to 100,000 on a normal pre-pandemic day with between 30,000 and 40,000 visitors.
In response, in an interview with Financial News the director of strategy of Canary Wharf Group said he “plans to add shops and entertainment venues as well as to develop its arts scene to rival the likes of trendy hotspots Shoreditch and Hoxton.” No plan has been disclosed, but its current owners, a consortium which includes the Qatari and Chinese sovereign investment funds, amongst others have moved forward with new high end residential plans, like Wood Wharf on its outskirts. It appears their sights are set firmly on the idea of converting the towers into flats, which may become the domain of foreign absentee landlords.
The district is still cheaper than central London, but the rent gap has closed, and as new office hubs have sprung up in King’s Cross, Farringdon and Stratford, securing new tenants could become harder. Canary Wharf’s ability to attract based on price is much harder now, and suburban offices are the future, says the property smart money.
Although Canary Wharf is limited in its ability change its infrastructure, it has largely allowed the narrative around the future of the estate to be led by its tenants. HSBC, Barclays and others have communicated their intentions around their work from home policies. Most are reducing the time staff will spend in situ, with lower occupancy flagged. Moreover, for years, the banks have recognised the communities in which they operate and have significant outreach and volunteering programmes in place in neighbouring boroughs. A better explanation of Canary Wharf’s sustainability initiatives, focusing on the community impact may pay dividends. A cohesive stakeholder plan, much more imaginative in scope than the current near silence around its future is needed.
When the 19th century docklands were built, no one imagined they would one day become derelict. The development of Canary Wharf was not uniformly popular among the local community who saw their way of life, where generation after generation had worked in the docks, under threat. Now the suits might be facing the same outcome. If the Wharf doesn’t tackle its existential crisis, the mighty office block towers could soon become like a scene from local resident Danny Boyle’s 28 Days Later.