Canary Wharf, the steel and glass office city in the Docklands, finally seems to have come of age. On Friday, in a moment of beautifully timed coincidence, the property group published its first results as a public company - and London Underground opened the long- awaited Tube station at Canary Wharf.
The company is still making a loss - pounds 42.8m in the year to June - but that's half the loss it made last year. And chief executive George Iacobsecu expects the group to go into profit next year. The existing space is nearly fully let, and future growth is anticipated from an increase in rental income. The promise of a 9 million sq ft development programme over the next 10 years, allied with growth in the London office rental market, has seen Canary Wharf's share price leap 16 per cent since April's 330p flotation.
Its success may pain the City of London, which regards Canary Wharf with a mixture of scorn and envy, but London's attempt to assert itself as Europe's financial capital would almost certainly have failed were it not for the extra 3.4 million sq ft of space in the original Canary Wharf development.
Morgan Stanley Dean Witter and Credit Suisse First Boston are the biggest City names already in the Wharf, while work on Citibank's 560,000 sq ft tower is nearing completion. Construction is now under way on a 1.1 million sq ft tower, the new worldwide headquarters for the banking giant HSBC. Citigroup, Citibank's parent, is taking half the space in a second tower, due for completion by the end of 2002.
Bear Stearns, Bank of New York, State Street Bank and Barclays Bank also have offices in the development. And the Financial Services Authority (FSA), the new financial super-regulator, chose the Wharf rather than the City for its headquarters.
As John Ritblat, chairman of British Land, the City of London's most powerful landlord, puts it: "Canary Wharf has given London room to breathe."
Canary Wharf was built by the Canadian property developer Paul Reichmann's company, Olympia & York. When it went into administration in 1992, the project became the property of a consortium of international banks. But Mr Reichmann, with Prince al-Waleed of Saudi Arabia and other investors, bought it back for pounds 800m three years later. The deal proved to be a financial masterstroke. Now the project is worth pounds 2.57bn.
Yet in spite of all this, City analysts may have good reason to doubt the growth potential of the Canary stock. Indeed, Mr Reichmann's company's share price has fallen nearly 70p from its 450p peak last July.
One office building under construction is still unlet. Foundation work has begun on other sites but there seems to be a lack of tenants. A source close to the letting team at Canary Wharf said last week: "Don't expect any announcements. We hope to have something by Christmas, but there's nothing imminent."
However close Canary Wharf is by Tube, and however competitive its rents, it risks being squeezed out of the big new deals by a development frenzy in the City. Earlier this year, the Corporation of London relaxed its ban on new tall buildings. The powerful property company Land Securities is now dusting off plans for three big City schemes aimed at keeping financial institutions in the Square Mile.
Its rival …