Has Canary Wharf Tried to Fly Too High? News Analysis: Wave of Building Raises Fear That Seeds of Future Problems Lie in Apparent Success
Willcock, John, The Independent (London, England)
"I DO THINK that at last Canary Wharf has got its act together," a leading property analyst remarked last week. With the 4.5 million square feet of development 99.9 per cent let, three buildings under construction and several investment banks rumoured to be moving to London Docklands, prospects look encouraging.
Stories about a new one million square foot office block, a twin- tower headquarters building, and suggestions that Dresdner Kleinwort Benson is about to relocate from the City to Canary Wharf have all fuelled the rumour mill in recent weeks - despite being denied.
But in Canary Wharf's success lie the seeds of possible problems. Having fallen into administration in 1992 because of overdevelopment in London, some analysts worry that the same may happen again. With the global financial crisis hitting investment banks, are Canary Wharf and the City together building too much office space? This suggestion may seem churlish given the strides Canary Wharf has made since being dismissed as an "Eighties white elephant" in the last recession. The new consortium that owns the complex is adamant - things are different this time. Speculative building has been kept to a minimum, with just one block, at Westferry Circus, under construction and yet to find a tenant. Elsewhere Citibank is close to completing its new head office, designed by Norman Foster, which it will own outright. Opposite it, and next to the nearly completed Jubilee Line extension station, HSBC is about to start building its own pounds 500m head office next spring. CSFB, one of the earliest converts to Canary Wharf, is completing a 275,000 square foot extension which will contain the largest dealing floors in the UK, at 80,000 square feet. This is what Canary Wharf offers - cheap rents and big floor plans. This is also what riles the City of London, which has seen a steady stream of its most rewarding residents - Morgan Stanley, CSFB, Citicorp, even the Financial Services Authority (FSA) - moving downriver. A lot of this was due to the massive tax breaks bequeathed by Margaret Thatcher's government to kick-start the development in the 1980s. As Stuart Fraser, chairman of Planning and Transportation at the Corporation of London, put it: "The offer of pounds 235m to HSBC to move two miles downstream does seem to be a generous use of taxpayers' money." Mr Fraser confirms there is still rivalry between the City and Canary Wharf, if not as bitter. …