Farewell to the “tower of doom”, hello to views of St Paul’s. One suspects a majority of the 8,000 inhabitants of HSBC’s 42-storey global head office in Canary Wharf will be delighted by the prospect, in late 2026, of a move westwards to a redeveloped former BT building near the cathedral. A sterile life in docklands, as HSBC staffers’ nickname for their office indicates, has never been everybody’s cup of tea.
For Canary Wharf Group (CWG) – these days jointly owned by Qatar’s sovereign wealth fund and the Canadian developer and property owner Brookfield – HSBC’s looming exit is undoubtedly a blow. While the bank’s building itself isn’t owned by CWG (it was bought by Qatar Investment Authority alone in 2014), the departure of a name that has been on the skyline for two decades sends a signal about the way the wind is blowing in London’s office market.
HSBC warbles about wanting “a more flexible and dynamic workspace that meets the needs of colleagues and clients”, but what it means is that it can make do with less space. The new office will have half the square footage of the tower in Canary Wharf – a reflection of the trend towards hybrid working and the bank’s ambition to cut 40% from its global property costs. Big banks no longer need enormous statement offices.
There are still big beasts staying at Canary Wharf, it should be said. Citi, another occupant of a large tower, has renewed its lease and will upgrade to meet the other pressing demand for higher environmental standards. On the other hand, the legal giant Clifford Chance has also come to a HSBC-style conclusion: it will move to a smaller premises in the City when its Canary Wharf lease expires in 2028. So the need to reinvent the docklands estate as a whole looks ever more urgent.
CWG’s debt was downgraded deeper into junk territory by the ratings agency Moody’s only last month, which cited a “difficult operating and funding environment for real estate companies” and pointed to £1.4bn of borrowings falling due in 2024 and 2025. It argued that asset sales or an injection of fresh capital may be required. Higher for longer interest rates (probably) will not be easing the pressure.
CWG’s plan is to look to technology firms, the life sciences sector and the residential market. And the strategy, up to a point, is having an effect. The presence of the Medicines and Healthcare products Regulatory Agency, the UK’s post-Brexit successor to the European Medicines Agency, is a lure for healthcare and biotech firms. Genomics England, which provides genome sequencing diagnostic services, and Barts Health NHS trust are also there.
Meanwhile, more than 3,500 people live on the Canary Wharf estate, compared with zero three years ago, and the opening of the Elizabeth Line is claimed as a “game changer” for the push into retail and leisure. The CWG chief executive, Shobi Khan, has spoken about “Canary Wharf 3.0” as a “neighbourhood” project.
The hard part, though, is believing this vision can be realised while keeping pace with asset values in the City of London, which themselves were battered during the pandemic. The danger for CWG is being caught between two stools. It still generates 55% of its rental income from a financial sector in downsizing mode; and the reinvention plan is still in its infancy. The exit of HSBC is still three years away, but there is now a very large hole to be filled.
