Ca­nary Wharf said to lure EBRD, scor­ing one over City of Lon­don

Gulf Times Business - - BUSINESS -

Bat­tling Brexit and a decade-long re­treat of banks, Ca­nary Wharf Group Plc is on the cusp of a much-needed win over its long-time neme­sis, the City of Lon­don.

The East Lon­don fi­nan­cial district will soon snatch the Euro­pean Bank for Re­con­struc­tion and Devel­op­ment from its ri­val af­ter the fi­nan­cial in­sti­tu­tion opted to lease space at the un­der-con­struc­tion 5 Bank Street tower, peo­ple with knowl­edge of the plan said, ask­ing not to be iden­ti­fied be­cause the talks are pri­vate.

The deal would be a break from a re­cent los­ing streak that has seen lenders in­clud­ing Deutsche Bank AG, Wells Fargo & Co and Jef­feries Fi­nan­cial Group Inc opt for new space in the City of Lon­don.

The dearth of bank leases has sup­pressed rents in Ca­nary Wharf, which now carry a much greater dis­count to the City than they did be­fore the fi­nan­cial cri­sis.

While the EBRD, cur­rently based in the Broadgate com­plex near Liver­pool Street sta­tion, is still se­cur­ing in­ter­nal ap­provals for the move to Bank Street, Ca­nary Wharf has ceased of­fer­ing the space, the peo­ple said.

The EBRD lease, which would be the big­gest agreed in the district in two years, would be a coup for the Qatar In­vest­ment Author­ity and Brook­field Prop­erty Part­ners LP, which bought Ca­nary Wharf Group for about £2.6bn ($3.3bn) in 2015.

If the deal goes ahead, the EBRD will join So­ci­ete Gen­erale SA in the build­ing, which is due to be com­pleted next year. The French lender was the last bank to sign a ma­jor lease for a new of­fice in Ca­nary Wharf when it agreed to rent the space in 2014.

Re­silient de­mand for of­fice space has kept rents and prices near record highs in the City of Lon­don while the threat of a dis­or­derly Brexit has weighed more heav­ily on Ca­nary Wharf due to its higher pro­por­tion of in­ter­na­tional bank ten­ants and the risk they could be forced to move staff.

Ca­nary Wharf lost out in an at­tempt to woo Deutsche Bank away from the City with premises that were cheaper and pur­pose-built. The rent at the bank’s planned new base at 21 Moor­fields in the City will be at least £145mn higher over the course of the lease, and sub­stan­tially more once taxes and in­cen­tives are in­cluded, ac­cord­ing to cal­cu­la­tions by Bloomberg News.

The sums are based on fil­ings by de­vel­oper Land Se­cu­ri­ties Group Plc, which is build­ing Deutsche Bank’s new City of Lon­don of­fice, and peo­ple with knowl­edge of the Ca­nary Wharf pro­posal who asked not to be iden­ti­fied as the terms were con­fi­den­tial. The Ger­man lender al­ready leases a smaller space in Ca­nary Wharf that it will con­tinue to use once the new City of­fice is built.

In­tense com­pe­ti­tion has prompted Ca­nary Wharf to ac­cel­er­ate its pivot to­ward pro­vid­ing of­fices aimed at tech­nol­ogy com­pa­nies and de­vel­op­ing homes. In Oc­to­ber, the com­pany launched Wood Wharf, a 23-acre site next to the ex­ist­ing es­tate that it aims to turn into the largest clus­ter of tech and creative busi­nesses in Europe.

The 5mn square-foot (465,000 square me­tre) pro­ject, about 10 times the space in the Gherkin sky­scraper has al­ready at­tracted ten­ants in­clud­ing En­nis­more In­ter­na­tional Man­age­ment Ltd, owner of the Hox­ton Ho­tel in Shored­itch, and Black­stone Group LP’s flex­i­ble of­fice plat­form The Of­fice Group. About 40% of the space will be used for of­fices and the plans also in­clude about 3,300 new homes and 490,000 square feet of stores, restau­rants and com­mu­nity fa­cil­i­ties.

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