New deals set to save Wharf from ghost town future

New deals set to save Wharf from ghost town future
Nick Mathiason
guardian.co.uk, Sunday November 23 2008 00.01 GMT
The Observer, Sunday November 23 2008

As the number of bankers losing their jobs grows, there is speculation that Canary Wharf, the steel and glass east London office complex, will become a ghost town.

Dubbed Wall Street on the Water, Canary Wharf was the world's securitisation factory, the place where some of the arcane financial instruments that have destroyed the world's economy were devised.

Some real estate experts believe the controversial 14 million sq ft development, which received hundreds of millions of pounds of taxpayers' money, will once again suffer as the world financial crisis worsens.

But such talk could be misplaced. Canary Wharf, owned by a collection of tycoons including Paul Reichmann and Saudi Arabian prince Al-waleed Bin Talal, is 99.7 per cent let on leases, with an average 18.4 years unexpired.

Even the demise of Lehman Brothers, a key tenant, has been shrugged off. Canary Wharf is guaranteed to continue receiving rental income. If Lehman's new owner in London, Nomura, defaults on the lease, US insurance giant AIG, which itself received a £120bn US bail-out, will pay the rent for up to four years.

And last week, JP Morgan, the giant US bank, agreed to develop with Canary Wharf Group a 1.9 million sq ft office building in east London. The US giant spent £237m to buy the land.
In the next 18 months, the ranks of Canary Wharf's 92,000 workers will be swelled by KPMG, State Street and two other giant businesses, which will be renting a total of 1.3 million sq ft. And they could be joined by a host of other companies with huge space requirements. They include Deutsche Bank, Bloomberg and UBS.

Many believe that once Crossrail is built to Canary Wharf after the London Olympics, Docklands will no longer be a bankers' ghetto but fully integrated into the capital. To many the Wharf is the perfect encapsulation of Margaret Thatcher's economic vision. Temples to capitalism were built on the site of what at the turn of the 20th century were the world's most important docks.
And, as Canary Wharf has matured, new London office centres are being developed. The latest, behind King's Cross station, is receiving significant tenant interest. BNP Paribas is rumoured to be close to taking a building there and could be joined by fellow French bank Société Générale.
While trillions of pounds are lost in the global meltdown, London property bosses believe that Chinese and Indian banks will be the next to commit to the capital, ensuring it retains its global pre-eminence - though such talk seems like a pipe dream as the City braces for more job losses.

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