London’s Canary Wharf Tries to Revamp Its Image as Banks Exit

Built nearly 40 years ago, this gleaming skyscraper in London’s eastern skyline is home to the headquarters of the world’s largest bank and tens of thousands of office workers.

But lately, as the work week begins, Canary Wharf’s towers are quiet and nearby restaurants are empty. This is a result of the shift to remote work during the pandemic, when office markets around the world have plummeted and vacancy rates have risen. As companies adapt to hybrid work, many are reducing their physical footprint.

HSBC recently announced that it will leave its longtime headquarters in Canary Wharf in late 2026 and move its 8,000 employees to a smaller space in London’s central banking district, about three miles west. The company’s exit, followed by several others, has fueled speculation about the district’s future.

The move sees owners of Canary Wharf, a purpose-built 128-acre financial services hub, add housing, build laboratories to attract life sciences groups, and host cultural shows and activities. It was held while focusing on the revitalization of the city, such as hosting the event. Their vision, something made even more important by the pandemic, is to make the district better. A place to live, work and play, not just for bankers.

There is evidence that the effort is beginning to bear fruit. The skyscrapers are now filled with residents walking their dogs along the district’s waterways. Lawn areas between office buildings are transformed into impromptu outdoor cinemas, and swimmers brave the channels between glass-enclosed buildings. With several life sciences start-ups and healthcare companies setting up, traffic to Canary Wharf station nearly doubled over the weekend in June compared to pre-pandemic.

“It would be naive to think Canary Wharf hasn’t thought about how to deal with this problem for a long time,” said Alexander Zhang, chief economic adviser to the London Property Alliance, an advisory body for property investors and developers. ” says. “They are in a very strong position to adapt.”

Skeptics were once unsure whether the district could survive. What was once a deserted wharf until the 1980s, when developers and businessmen saw the potential for sprawling offices, was the collapse of commercial real estate in the 1990s and the 1992 opening of first developer Olympia & York. It survived bankruptcy in 2008 and fierce competition from London’s oldest banking district. until 2015, when it was acquired by investment group Brookfield Property Partners and Qatar’s sovereign wealth fund.

Canary Wharf Group declined to comment on HSBC’s exit. But the problem is also hitting downtown districts in cities like Chicago, New York, Houston and San Francisco, as landlords struggle to rent out vacant office space. U.S. commercial real estate values ​​fell by $506.3 billion in his three-year period to 2022. according to some estimates.

Many landlords are also facing a confrontation with financiers reluctant to lend to office building owners as interest rates rise and borrowing costs rise.

The UK capital faces similar challenges, albeit to a lesser extent. While commercial property values ​​in the city have fallen, office vacancy in central London was 8.4% in the first three months of 2023. Real estate subsidiary of French bank BNP ParibasIn Canary Wharf, it was 17.3%, according to real estate consultant Knight Frank. Lower Manhattan vacancy hit a record high of 25.6% over the same period, according to real estate firm Colliers.

The Canary Wharf Group, which owns about 40 percent of the land and its development, will have a tough time ahead. Credit rating agency Moody’s downgraded Canary Wharf Group’s debt in a May report, citing weak markets, upcoming refinancing of £1.4 million of debt and pressure to discount assets.

Following the downgrade, the group said its report reflected the broader market, noting total assets of £3.6bn ($4.7bn) and saying it was in “good financial condition”. rice field.

Non-HSBC departure flights include: Clifford Chanceinternational law firm, Which cites flexible space requirements as one of the reasons for moving to a central London office in 2028. Much more could follow – over the tenancy rights of Canary Wharf Tower, where reports of the recent takeover of Credit Suisse by Swiss banking group UBS and subsequent layoffs have raised questions.

Clifford Chance, UBS and Credit Suisse declined to comment.

But even if more companies exit, analysts say firms in other sectors, perhaps priced out of central London, will eventually take over them. said it would be replaced.

“It would be surprising if this was the beginning of the end of something,” said Anthony Travers, professor of public policy at the London School of Economics and Political Science, who said many companies were based in city centres. He added that he felt a sense of prestige in

Others agreed, saying the HSBC tower has a reputation for attracting other businesses.

“This is an iconic building that crosses the London skyline. It won’t necessarily disappear,” said Kanab Gupta, an architect who works in the district. “Even if one giant company leaves, there will always be a replacement.”

In a city suffering from a housing shortage, one of Canary Wharf’s main bets is 23 acre residential district There are 2,300 homes within walking distance of a skyscraper under construction, which analysts said could help developers avoid the impact of remote work. The organization says one of its priorities is to make the area more livable, with more schools and shops, as well as more opportunities to interact with greenery and water.

Megan Jones, 28, was one of the district’s 3,400 first residents since it opened to residents three years ago. Initially, she said, the area was like a ghost town on weekends. But when she went for a walk with her husband and her baby on a recent Friday, she was surrounded by music and chatter coming from the bar. “I’m definitely busier than I used to be,” she said. “We love it.”

Another gamble is to attract companies in the flash life sciences and healthcare sectors, which are taking up a lot of unused office space in North America for labs.canary wharf officer Said Their strategy is to make the district one of Europe’s leading life science centers.

biotechnology companies, start-up company, government medical institutions have already set up camps. But Canary Wharf’s next milestone is a 22-story life sciences building due for completion in 2024, which it hopes will spark a European life sciences hunt. Minister of Finance Jeremy Hunt.

In some ways, the long-term strategy seems to be working. The number of visitors to Canary Wharf on a weekday in June recently matched pre-pandemic levels, according to London’s transport regulator. Weekend traffic was 181% above pre-pandemic levels.

Traffic has been significantly boosted by the opening of the Elizabeth Line, a new rail service linking the district with central London and Heathrow Airport. Shobi Khan, Chief Executive Officer of Canary Wharf Group Poured With £150m invested in rail development, the Elizabeth Line has been dubbed a ‘game changer’.

Canary Wharf restaurant Big Easy’s general manager David Jansky said the restaurant is still dominated by office workers during lunchtime on weekdays. “What we realized after the pandemic is that Thursday is the new Friday,” he says. Weekends are still busy, with people coming from outside London for brunch, he said.

Still, Londoners who have identified Canary Wharf as a white-collar hub are still unconvinced to spend more time there than necessary. IT worker Jordan Croucher plans to move further south to see more parks and be closer to his friends, even though the rest of the city is easily accessible. said. “I tried it, but it didn’t work for me,” he said.

And Jenna Greenwich, 39, who was meeting friends for drinks after work on a recent Friday, said Canary Wharf is where the night starts, but not where it ends. “There’s a little bit of humanity, but it still feels like it’s missing,” she says.

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