Canary Wharf’s new lease of life

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Canary Wharf is proving its doubters wrong. Following the pandemic, many predicted the demise of the east London financial district’s prime real estate status. The rise in hybrid working had led office areas in cities around the world to feel eerily empty during the working week. The City of London, three miles to the west, was also luring big tenants away. In 2022, law firm Clifford Chance unveiled plans to downsize to the Square Mile. In 2023, HSBC — whose iconic 45-floor tower dominates the Docklands’ skyline — announced that it, too, would be leaving for a smaller building near St Paul’s Cathedral.

But the former fruit-importing quay may now be on the cusp of another turnaround. In the second-quarter of this year the valuations of some of its largest offices rose for the first time in three years, based on the portfolio of the Canary Wharf Group, the landlord and manager of the wider estate. Leasing activity is returning too. Visa is in talks to move its European headquarters there, Spanish bank BBVA is renting more space, and fintechs Revolut and Zopa have secured new premises. Last week, the Financial Times reported that JPMorgan Chase had also stepped up plans for a new tower.

The high-rise district’s unexpected improvement owes itself, in part, to overly glum forecasts around the future of office work (and indeed London’s role as a global financial centre), as well as common sense renewal efforts.

Large companies in banking and finance have been reversing pandemic working policies and mandating more time in the office. The benefits of in-person interactions have also become clearer to staff after long periods of working remotely. Canary Wharf’s open spaces and fewer building restrictions, relative to the City, have given it an edge with firms eager to scale back up. The desire for high-profile statement properties, proudly bearing company logos is another factor. 

Earlier this month, HSBC signed a 15-year lease for an office close to its current Canary Wharf global headquarters, which it plans to vacate in 2027. The return of Europe’s largest lender comes amid a desk shortage at its new City office. Citigroup is on course to spend over £1bn to transform its base in the district into a modern workspace including wellness facilities and a rooftop client entertaining area.

CWG has also been diversifying. In recent years, it has started to reshape the district — which has often been described as “soulless” — with investments in housing, retail and leisure. There is a revamped waterfront, greener spaces and festivals. Now families are just as common in the area as gilet-wearing bankers. The district has also tapped into rising demands for space from Britain’s leading life science industry, as restrictions across the country frustrate development. Last year, work began on a 23-storey tower designed with laboratories on each floor. Rail connection via the new speedy Elizabeth line has raised accessibility too.

By developing a more captive population, improving connectivity, and branching out beyond finance, footfall has risen steadily since 2022. This has supported local shops, bars and restaurants which, in turn, has helped to retain the district’s appeal for office workers.

The area’s revival is far from guaranteed. It won’t shed its functional, office image overnight. In Q2, office vacancy rates in the Docklands’ core market around Canary Wharf were notably higher than London as a whole, according to CoStar Group. The UK’s strengths in finance and life sciences are also coming under pressure from global competitors. Still, Canary Wharf’s welcome course correction, against the odds, is a reminder of how downbeat predictions need not be destiny.