As traditional office owners wait nervously to see if their buildings fill back up as the pandemic eases, even the most established are being forced to rethink their offerings – with Canary Wharf Group the latest to try a new way of wooing tenants. All eyes will now be on the Docklands estate and whether it can prove that businesses still want and need their offices.
For all its talk of becoming a seven-day-a-week destination, Canary Wharf’s fortunes remain inextricably tied to its office market. The estate had an estimated 120,000 office workers before the pandemic. Now, as the government lifts all Covid restrictions, its Tube station records an average of less than 70,000 daily taps in and out, according to TfL’s most recently published travel data.
That, perhaps, is why its new flexible office product, MadeFor, has caused such a stir. It will launch across four of Canary Wharf’s most famous offices, including One Canada Square and 40 Bank Street.
Howard Dawber, Canary Wharf Group’s strategy chief, said: “This is your own office and your own front door – but we have done all the hard work.”
The launch could not have come soon enough. When compared with the UK’s other large-scale office landlords, CWG is behind the curve. British Land launched its flagship flex product, Storey, in 2017, while Landsec’s equivalent, Myo, came in 2019. Great Portland Estates and Derwent have also been pushing into the flex sector for several years.
At first glance, MadeFor appears to fit with the landlord’s plan to broaden its post-pandemic tenant base. CWG has already had success with its accelerator space on the 39th floor of One Canada Square, which helped challenger bank Revolut grow from a handful of desks to a company with more than 2,000 employees.
However, the group hopes existing occupiers will also be retained. Its first customer is Citi, which has taken 95,000 sq ft of interim space as the banking giant revamps its Citi Tower headquarters. “We have worked with a lot of the big customers at Canary Wharf when they have needed additional space on top of their main lease in the past, and this fits very well with that sort of market too,” Dawber said.
Chris Grigg, former chief executive of British Land, said MadeFor is likely to help CWG lift its leasing activity.
He said: “When we launched Storey we wanted to signal to the market that we were willing to do new things and were willing to change. And it did help with lease negotiations and bringing in new occupiers.”
There are those who will question whether the estate has left the launch too late. But Chris Lewis, head of occupier advisory at Devono, said he was optimistic. “There are a whole load of businesses that still aren’t ready to make a bet on what their future footprint looks like and their ways of working,” he said. “Having something that gives them the ability to get their people back together again in a serious office, in a serious estate is a really attractive thing.”
CWG has traditionally maintained its competitive edge through low rents in comparison to the West End and the City of London. Now, money is becoming less of an object for financial institutions and other major corporations, which are increasingly focused on the quality, green credentials and surrounding amenities of their offices.
Dawber said he believes CWG already offers these things, pointing out that it will benefit from the opening of Crossrail later this year, while its shopping centre is one of the largest in the capital. The area also has a pipeline of thousands of new flats that will be delivered over the coming years as it tries to pivot to become a mixed-use destination.
“We have got some advantages over other locations, and we intend to make the most of those,” Dawber said. “There are not many places where you can go out at lunch time and sail.”
Whether it is enough to convince occupiers is not yet clear. Citi’s decision to take interim space was a boost for the estate – as was the bank’s recent decision to refurbish its tower – but legal firm Clifford Chance remains undecided on whether it will leave its 10 Upper Bank Street headquarters of more than two decades. Others may decide that a resurgent Square Mile, which has vast quantities of top-quality office space coming to the market between now and 2025, is preferable to being out in the Docklands.
Dawber refused to be drawn on the Clifford Chance search: “We have an ongoing conversation with them about providing them with amazing future space. It’s up to them, I wouldn’t want to speak for them.”
But on the quality of Canary Wharf’s offering, his priorities were clear. “We don’t want to just compete on value in terms of competitive rents. We want to compete on being the best place to work,” he said. “That is vitally important.”
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