In August 1991, Canary Wharf Group opened the doors at One Canada Square, then the UK’s tallest tower and an immediately recognisable addition to the east London skyline. Thirty years later, the developer wants to change people’s perception of the area once again – this time not with offices, but with housing.
The first BTR homes in Canary Wharf opened in February 2020, just weeks before lockdown. As offices emptied, the residential skyscrapers have slowly filled. This summer, weekend footfall in the local Waitrose overtook that on weekdays – a sign of residents’ activity overtaking that of workers. And as CWG looks to new development at the 128-acre estate, it is betting on BTR.
The group has 1,000 BTR flats completed and a further 2,000 in the pipeline, from the family-friendly Wood Wharf through to Park Place, in a 55-storey tower replacing old office plans neighbouring the homes of Morgan Stanley and Societe Generale. As more and more flats come into development and onto the market, CWG aims to diversify.
“It is not just steel and glass and concrete – there is more to it,” says Alastair Mullens, managing director of Canary Wharf Group’s BTR platform, Vertus. CWG’s arts and events programme has aimed to highlight this over the summer. “People are now very much being drawn in by the destination, to come and find some of the best restaurants in London and the new parks at the boardwalk in Wood Wharf.”
Mullens’ argument is echoed by many venturing to Canary Wharf at the weekend. A social media post from CWG’s chief financial officer, Rebecca Worthington, in mid-August showed crowds of people enjoying live music in the park, with the words: “Canary Wharf is buzzing tonight.”
CWG might have sold the summertime revellers. But to succeed, the group will need to persuade residents, planners and investors that it can create a community beyond the banks and businessmen that have dominated for decades.
A different product
The developer is going into the next phase of development with learnings from the first three buildings, with lease-up in possibly the most challenging period. After 10 George Street’s launch on Valentine’s Day 2020, just weeks before the UK’s first Covid lockdown, 8 Water Street followed shortly before the Christmas shutdown.
Yet the group still managed to lease-up around half of those 500 flats, and marched on with a further 636 at the 58-storey Newfoundland this May, today already 20% let. “We slightly held off to ensure that we were hopefully capturing the market as it moved upwards, and obviously we didn’t want to completely flood the market,” says Mullens.
Monthly rents in Canary Wharf start at around £2,000 for a studio flat not much larger than 400 sq ft. 10 George Street is the most amenity-rich, 8 Water Street is low-rise and pet friendly, for a more mature renter, and Newfoundland is the flagship, premium product.
“Initially, our focus saw a lot of customers coming from E14, E16. They were relatively local and were simply upgrading to live at Canary Wharf. It was the first opportunity to actually live within the private estate,” says Mullens. After soaking up the young professionals, the group began to look further afield, drawing in tenants from Nine Elms and a new student population.
Mullens estimates that around 40-50% of tenants are from overseas, with a large cohort from China in recent weeks. Corporate stays are another source, providing short-term lets that Vertus aims to turn into long-term tenants. Now, the success of BTR relies on expanding this base, with new schemes to offer mid-market rent and co-living. “It is making sure we can learn from what we have built and develop buildings for different customer markets and sub-markets – that we are not just attracting a single type of demographic at the higher end of the market.”
Canary Wharf has this magnetic pull on what surrounds it, and it creates opportunities for other landowners and other development in and around that area
– David Williams, Tower Hamlets Council
Competitive market
As Canary Wharf broadens its target market, the group faces a wider pool of rival schemes, from the mass of lower-priced BTR at Canada Water to luxury housing across the capital.
“Long-term success will come down to a combination of factors, particularly excellent design, engaged customer service, a strong brand identity and a sense of community,” says Kate Brennan, partner at Montagu Evans. “There is a significant supply pipeline, so schemes will need careful pricing strategies. Without a doubt it is an area to watch, especially if its office market remains in flux as corporate working patterns evolve.”
That established commercial offering will also be an advantage for the BTR. Debra Yudolph, partner at Say Property Consulting, says residential will allow Canary Wharf to become self-sufficient. “Clearly, the opportunity for Canary Wharf Group is to make it a much more mixed estate,” she says. “They have world-class offices and retail, the F&B has really improved, the missing bit is obviously the residential.”
Today, regeneration tends to be mixed-use from the off, and as CWG seeks to upgrade its offer, Yudolph says it should take note from places such as King’s Cross. “The opportunity they have with delivering scale is that they will be able to create a place,” she adds. And she reiterates that pricing and affordable homes will be essential in this next phase. “That’s the challenge for so many homes – they need to make sure they are capturing a wider audience. That’s true generally of the estate. It has to appeal to a wide range of occupiers to be really sustainable for the long term.”
No longer an island
After 30 years of a mega-district walled off to the rest of Tower Hamlets, this is set to change. David Williams, the council’s deputy director of planning, says he remembers the old run-down docks before One Canada Square. “We’ve seen it grow from the core commercial centre, focused around the tower, through to now this large new district at Wood Wharf,” says Williams. “Not only is that an expansion of their estate, it’s also their estate coming close to where people live in our communities, and it’s integrating new communities.”
Inclusive, affordable housing and infrastructure will be key for opening up the estate. Crossrail will connect Canary Wharf to other parts of London, but walkable spaces are important too, making the area accessible. The council is using its community infrastructure levy to fund a pedestrian bridge from Wood Wharf to South Quay and the rest of Canary Wharf.
Investments like these are not just a benefit for locals. “Canary Wharf has this magnetic pull on what surrounds it, and it creates opportunities for other landowners and other development in and around that area,” says Williams. But it doesn’t stop there – a balanced, thriving metropolitan locale has wider implications. That means that Canary Wharf is not only important for Tower Hamlets, Williams says – “it is important for London”.
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