Receive free commercial real estate updates
We will send you a file myFT Daily Digest Rounding email to the latest Commercial real estate News every morning.
London’s Canary Wharf early occupants in the 1990s grumbled that they had caught more stumbling blocks than business connections there. HSBC’s plan to move into the city shows that the redevelopment of the dockyard is again becoming less desirable compared to the Square Mile and West End.
The transformation is half of the quadrilateral division. The post-pandemic bifurcation between high-quality buildings and the more casual type is also becoming more apparent.
Blame it on downsizing. Business needs less space. They have fewer employees, due to homework. Some have cut staff numbers.
The big landlords on the list like British Land and Land Securities are relatively isolated. Ratings for their high-quality offices have fallen by about a tenth in the past year. Prices for lower-grade buildings have fallen sharply.
Occupancy rates are over 90 percent for premium spaces and rents are growing at medium to high single-digit rates. Advance leasing of new space is accelerating.
Owners scramble to convert substandard shares and avoid the risk of stranded assets. They started 3.2 square meters Many new renewal schemes were introduced in the first quarter of this year, a record since Deloitte began collecting the data in 2005.
Environmental standards mandate these upgrades. The first issue is that renovation has a smaller carbon footprint than demolition and rebuilding. Energy performance is the second driver. All rental locations require a minimum rating of E on a scale extending to G. The minimum rating will increase to C in 2027.
So much for quality. What about location, location, location? The problem with Canary Wharf is its heavy reliance on commercial and investment banks. These are shrinking as a result of Brexit and the post-pandemic drought.
Marie Dormeul of Green Street says this project is a clear weakness in London. It ranks low in desirability and some tenants have a high inclination to allow work from home.
Each departure reduces the combined benefits of staying. Law firm Clifford Chance, like HSBC, plans to relocate as part of its downsizing. Canary Wharf has underperformed revenue for every available metric since the pandemic. We expect this trend to continue.
The Lex Team is interested to hear from our readers. Please let us know what you think of Canary Wharf as a job site in the comments section below.