London's Canary Wharf financial district wants to convert swathes of empty office space into other uses including hotels, as it responds to faltering demand for its sprawl of office towers. Canary Wharf is seen as a test case for re-imagining struggling business districts, after high borrowing costs and home working post-pandemic hammered commercial property values globally.
Purpose-built complexes like Canary Wharf, Paris's La Defense and in many U.S. cities have been hit particularly hard. The vacancy rate for offices in London's Docklands area - which incorporates Canary Wharf - has more than quadrupled from as low as 4% in 2017 to nearly 17% as of September this year, according to CoStar data. The vacancy rate in the more central City district is 11%, the data shows.
In response, Canary Wharf plans to revitalise the area by making it greener, revamping out-dated buildings and repurposing some into other uses including hotels, leisure, retail, academia and cultural uses, the executives said. Overhauling offices will be costly, with the owners and any hotel operators likely to face costs running into the hundreds of millions of pounds or more.
The area's landlord, Canary Wharf Group (CWG) has had a tricky time financially. It said in April that its property values had fallen 15% in a year, driven by falling demand for offices, and last month it saw its credit rating cut further into junk territory by credit agency Fitch.
It added CWG would be selective about hotel proposals. By early 2025 Canary Wharf will have more than 1,000 hotel or short-term let apartment rooms available, including at hotel
CWG unveiled plans in July to redevelop one of the area's tallest office buildings, a 45- floor tower set to be vacated by HSBC, into a mix of uses including potentially a hotel. Further buildings are likely to be repurposed, said Tom Venner, CWG's chief development officer, although he said offices would remain a core part of the mix
