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Thirteen years ago, Lehman Brothers almost killed Canary Wharf. When the financial giant collapsed at the height of the financial crisis, it was a major blow to the area. The US bank, which had signed a 30-year lease for over a million square feet in a 33-storey tower, vacated the building on September 15, 2008 after filing for bankruptcy protection in New York.
At the macro level the impact was huge. The building’s owner – the Canary Wharf Group, which owns and develops most of the Canary Wharf Estate – was left massively out of pocket, finally receiving a $350 million settlement from Lehman’s liquidators in 2014. At the micro level the overnight loss of 4,000 big-money employees had an immediate impact on the local economy too. “The champagne bars closed down and were replaced by chain restaurants,” recalls Jon Massey, the editor of local lifestyle publication Wharf Life.
Thanks to the pandemic, history could be about to repeat itself. When Canary Wharf’s offices are fully occupied, they are home to 120,000 people every day. Those numbers fell dramatically due to lockdown. On the last working day of February just 19,282 people passed through Canary Wharf station, according to Transport for London (TfL) figures, down from 110,609 on the same day last year. At the peak commuter time of 8:00am, just over 1,000 people tapped through the Canary Wharf gates, down 93 per cent on the same hour of the same day last year.
TfL transport commissioner Andy Byford says it will take another 12 to 18 months before passenger numbers across the network return to 80 per cent of normal capacity. In Canary Wharf, though, the new normal is going to have to factor in the double-whammy of job cuts and the rise of hybrid working.
Traditional banks have continued to pare back on staff throughout the pandemic. HSBC, whose chief executive Noel Quinn committed to maintain its European headquarters at Canary Wharf earlier this year, is in the midst of reducing its global headcount by 35,000.
Barclays, whose One Churchill Place tower is 32 storeys high, is resuming redundancies after a pause during the first lockdown. Alongside JPMorgan and Morgan Stanley, Barclays has also raised the prospect of at least some of its staff continuing to work remotely once all restrictions have been lifted.
They are far from alone. Law firm Clifford Chance, which has occupied most of a one million square foot tower at Upper Bank Street for the past two decades, has indicated that agile working will remain in place as part of its phased return to the office. Fintech business Revolut, which started life in Canary Wharf tech incubator Level39 before taking space at Westferry Circus, has not only told its 800 London staff they come in as and when they choose but that they can spend up to two months of the year working abroad too.
The moves will, says Revolut’s vice president of people Jim MacDougall, “offer everyone the best of both worlds”. “Our people have told us that they really love the better balance they’ve achieved by working from home, but they said they missed colleagues and the chance to collaborate face to face on key projects and to balance the convenience of home with the camaraderie of the office,” he says.
If a recent report from property consultancy JLL is anything to go by, the impact across the Canary Wharf estate could be dramatic. Almost three-quarters of employees told JLL they wanted to continue working from home on a regular basis, with most wanting to do so for at least two days every week. A similar proportion were in favour of moving permanently to a four-day working week, a policy floated by former Labour leader Jeremy Corbyn that is now gaining some traction as part of the Scottish election campaign.
Individually, each of these moves would have a significant impact on footfall in Canary Wharf; collectively they could wreak havoc. Yet local businesses are being surprisingly optimistic about the prospect. Take Birley Sandwiches: named after its founder Robin Birley, which had filed for administration at the end of last year. Birley had been funding the operation himself during lockdown, but rather than cut his losses chose to arrange a pre-packed rescue deal that keeps the same management team in place. At least three of its five Canary Wharf branches are expected to open soon.
Similarly, Pret a Manger, which decided to close 36 stores last year because of the pandemic, kept two Canary Wharf branches open during lockdown. It has since reopened all nine of its outlets on the estate. A spokesperson says the business, whose model is based around capturing commuter and office worker spend, “will obviously continue to keep things under review over the coming weeks and months”, but for now has no plans to reduce its own footprint in the area.
Others are just beginning to bet on Canary Wharf. Pergola, which until now has operated a series of pop-ups across West London, will open its first bricks and mortar restaurant in June, taking the 700-seater space formerly occupied by street food market Giant Robot. That is in spite of Giant Robot’s owner Jonathan Downey choosing to liquidate the business last October because, as he said at the time, “the industry is just fucked”.
Formula 1 star Lewis Hamilton has announced that a branch of his vegan burger chain Neat Burger will open on the estate in the coming months. Get a Drip, a wellness chain that injects a solution of vitamins and minerals directly into the body via an intravenous drip, opened a branch in Jubilee Place in December.
“There’s a common misconception, which was probably true in about 2005, that Canary Wharf is just big, shiny office towers full of financial giants,” Massey says. “It’s about 50-50 financial services and other things now, including a burgeoning tech sector. As the footprint has changed in terms of people so too have the various services on offer. When I first came here it was still full of City boys showing off with champagne, but then Lehman Brothers closed down and all of that evaporated overnight.”
For Massey, the fact so many businesses are committing to an office-based area that remains devoid of office workers is a mark of the transformation Canary Wharf is attempting to pull off.
“There’s a misconception that there’s no one in Canary Wharf,” he says. “We print 15,000 copies of Wharf Life every month and we do about 6,000 though the malls – they are all gone within two weeks. They are not the same people that were there before. There are some people in the offices, but a lot of them are now drawn from the local community.”
The Canary Wharf Group is banking on that local community to fill the void office workers leave behind. Via Vertus, its property arm, the organisation has developed three residential towers, with the estate’s first-ever private residents beginning to occupy the 327 apartments spread across 10 George Street’s 37 storeys last summer. Another 174 apartments have been added at 8 Water Street since, with a further 636 over 60 storeys expected to be ready when the Newfoundland tower opens up next month. Plans for a new office high-rise at 1 Park Place – the equivalent of two Gherkin skyscrapers – could be ditched in favour of a 60-storey apartment block, according to a Reuters report last week.
If TfL’s 18-month outlook does play out in Canary Wharf as it is expected to across the tube network as a whole, there will be somewhere in the region of 22,000 fewer people travelling into the area on a daily basis than there were before the pandemic. A spokesperson for Canary Wharf Group says it is seeing “huge demand” for the residential properties on the estate, but each of the new apartments would have to accommodate 19 people to make up for that shortfall alone.
In January Canary Wharf Group chief executive Shobi Khan told the Financial Times his ambition is to make the area a “24/7 city where people live, work and play”. The early signs may be promising, but given the mood music, the Canary Wharf is going to have its work cut out for it to make it work.
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