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Frontine. Have you been to Canari Wolf recent?
I have. I have lunches. I don't know about para leges, but I do have lunches. Funny thing.
The funny thing is I actually go there with my kids and for my kids because there'll be some sailing canoeing thing there. It's a different thing, it is, really, it is a very different thing. It's no longer the cliche, if that's the right word of my twenties, which was it's it's money money, money sits.
See, it's funny because for me it hasn't changed at all. It's for me it's a real still office, real estate kind of environment because there are a lot of suits. Everybody works really fast and the restaurants are like busy. But you know, you can see it's it's bankers basically.
But you know, the story about the Canary Wolf has changed, hasn't in the last few years from being the real rival to hear in the city to know is it in trouble or the banks giving up on it? Coming back to the fold and the square. Oh, that's been the story that we've been reading about. And as that's happened, and there's been a need for to transform itself into more residential place, more of a destination in the city. And is that for real?
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Welcome to in the City.
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Welcome to in the City. A podcast from Bloomberg about the story is important to the City of London this week? What are office estates going to do if there's no back to the office?
I'm Francis Laqua, I'm David Merritt, and I'm Alecri Stratton.
And joining us on the show is Shoby Khan, chief executive Officer of Canary Wharf Group, who has worked in real estate for more than thirty years. Shelby, thank you so much for joining us. When you think of Canary Wharf, like, what's your dream template for what this neighborhood in London becomes, It's always been like suits and ties.
Yeah, appreciate you. Thank you for having me. I think up it's the story of the evolution of Canary Wharf. I say, we're on Canary Wharf three point zero, and what I mean by that is that most folks in the London business community know was Canary Wharf when it started thirty six years ago. It was a financial center,
got amazing financial occupiers to come. The infrastructure started, and then nine years ago we started with Canary Wharf two point zero where we started building residential and that really didn't come on to existence until twenty twenty and twenty twenty one. I mentioned earlier that people are like, well, we did this because of the pandemic. No, the whole vision was to create a mixed use city, basically a city within the city, and that started. The residential came
on like three years ago. Three point zero was Hey, let's focus on biodiversity. Canary Wharf has an abundance of water and canals and so we've already got sixteen acres at park, so let's go long on biodiversity. Our partnership with the Eaton Project, with the Eaton doc opening up twos amenities you mentioned earlier. You can go swimming, you can play a paddle, you can go karts, go boats,
all that kind of stuff. There's tons of amanages there because whether you live there, whether you work there, whether you play. There's something for everybody. And finally it was to attract more occupiers because we are super well connected and so we were only fifty five percent financial. You know, people look at the skyline and go, it's all the bankers. But we've evolved into a government hub. We've got life
sciences now, we've got tech. Revolute is keeping its European World headquarters there, and so it's evolved into basically a city within a city, and that city in the city is basically the blueprint of how the urban environment and nature works for the benefit of humanity.
We're sitting in the city of London, the historic financial center of Britain, and I remember when Canario Wolf sprang up. It was very much a rivalry, wasn't it. This was the alternative rents were cheaper. Banks are relocating from around where we're sitting now to set up shop over there. Do you see it as a rival still to the traditional city or is it evolving into something quite different or complimentary.
I actually meant it to the government. We're trying to grow the pie you want to make the UK, London, especially the leading center in innovation and whether it be in tech or life sciences, and so they coexist. And I think what we're trying to do is play to our strengths and our strengths or the environment in terms of accessing the canals and accessing the parks and then having everything at your doorstep. We have eight grocery stores eight right, so it has really become a neighborhood on
its own. And when you look at within one mile of Canary Wharf, there's about one hundred and fifty thousand people. That's as big as Cambridge or Oxford in terms of that scale.
What's your hardest job? Is it attracting hoodies instead of suits? Does that make a difference? Like how do people choose where they want to live?
I think it's mestereli. It's not about the space, it's about the place. So everyone will be going to a sustainable, green building, right, So you're going to want the best space. But in addition to that, you want place and so convenience for employees, whether they want to go to the doctor or go to the dentist, having the ability to go to health clubs, having the ability to eat out
at nice restaurants. It's that whole environment, having areas where you can go have a cup of coffee on the water, being able to swim at your lunchtime, or play paddle. It's having that whole ecosystem so that no matter what you like or prefer, there's an option for you.
I think I've seen some plans for how you would renovate that central tower and it's fascinating because it's so deep as a tower, isn't it that there's no natural light in the center. So the architects have had to do quite interesting things around creating deep terraces and so on to get as much light into this thing. And just talk to our listeners personally, I found it.
Amazed as the old HSBC welding, which is basically like what block it's a.
Block deep, and again it was built in the early two thousands. Elizabeth Line didn't exist, so that whole connectivity it's really important. It's that basically you have to change the entrance of that building because it basically dumps out in the Elizabeth Line, right, So you come out of the Elizabeth Line, you could be in that property within
literally thirty seconds. So changing that whole access in the footprint and its streetscape of how it interacts with the Elizabeth Line, and then well it's got Canada Square Park on the other side, so again connectivity to green spaces and all that stuff. And then as it relates to the bottom, one of the things that we're doing is
adding more cultural uses. And so shortly fingers cross, we're going to be announcing a theater is going to be coming to Canary Wharf, that we'll be playing eight shows weekly, bringing thousands of people additionally for theater and so forth, we potentially can bring a theater at the bottom of the base of those big floor plates at the bottom.
And then again, if you go to Manhattan, if you've been one Vendor built or Hudson Yards or in Pire State Building, there's no real true experience of being on a rooftop in London with the outdoor. So the analogy is what's happening in Canada in that one property is happening across Canary Wharf in terms of making it a mixed uice environment not only within one building, but within the entire one hundred and thirty acres.
I think it's so interesting about this cultural angler as well. I didn't realize you're building a fit today thinking about in Manhattan, where you have now the parlymer Narts Center right next to the New World Trade Center, or in Hudson Yards, which I guess is like a Canary Wharf style development in Manhattan. You've got the shed. You know, this idea that you you set up culture institutions in that creates ecosystem. I remember when Canary Wharf first started.
I don't think anyone there would have thought of going to the theater over in the area.
It was very much or going sailing or going down doing.
But I mean I love a cultural you know, I gon next to me, but you actually moved to be closer to schools at some point, right, That's what everybody does in the UK, and New York is smaller. So if you're like one of the higher owners with a family and you're a Canary Wharf, you're a little bit stuck.
We just opened Mulberry Academy School and would work this past September, so we've got an academy school that is just open now. I think to your point, Canary Wharf is very unique in that we have scale. We have one hundred and thirty acres and so we don't know all the assets right. So you've got JP Morgan City
Bank on their buildings, oak trees, there a blackstone. You've got lots of different owners, but we get to curate that entire estate and that curation allows us to do lots of different things.
Is it going to plan or is it harder than you thought?
I think planning is much more difficult in the UK than is in the US. And the US you particularly have zoning and allows us to get on with you know, with the density and the uses. It's much much harder here. You have to do so much pre application and vetting with the local jurisdictions and so you know, we've been involved in Tower Hamlets, we've been involved in land, but
we've bobbed in the city. Each jurisdiction is owned. But the planning requirements and the timeline it takes to get stuff developed is extremely.
Long, and successive governments have talked about trying to unblock the pipes on that. Do you have any optimism that the Labor government are going to actually remove some of that perceived red type.
Of cautiously optimistic. I think everyone in the first step is they acknowledge that there's a problem, and now the question is how to solve it and how to get you know, some central government involvement with the local jurisdictions to make it a little bit more efficient but spritly needed. And I think you know, we're one of the biggest builders of housing in terms of rental housing that we're
trying to build in again in Canary Wharf. We're building different price points, so luxury, mid market, entry level, even affordable and intermediate housing. And to be able to do that, to taking market risk for four or five years is very difficult.
He told to us about the phenomenon of working from home WFH. It sounds like, you know, to people, to people from home, is that to people listening? What is your analysis of, you know, the footfall of workers.
Yeah, that's a great question. So let me step back in the residential population. Only thirty percent of our residents live and work at Canary Wharf, so we really established a neighborhood, right, so all the housing that we're doing that people are living there are going elsewhere, so whether it be to Stratford or to Westminster, et cetera. Like that. Because of the Elizabeth Line, the Jubilee and the DLR are getting new trains again. Those three newest activities are
all through Canary Wharf. I think you know you've seen all these different companies now annow it's how they're trying to get people back to the office. It's been proven, ironically, both for being in the office and about being around blue and green green spaces. Your creativity increases your innovation creations. It takes much longer to get stuff done if you've got people in the office and remotely. Companies are realizing that,
and I'd be ironic. Someone should do the study of who's profitable and whose earnings are growing versus their culture of who's in the office and who's not.
I would love to see, I think right done it.
We've done the study of We've done the study. We've done the study of the whole innovations in collaboration about being around blue spaces and green spaces, right, and that's been proven. To your point about our traffic, last year, we had sixty seven million people going through our retail centers, highest ever. Retail sales are the highest ever at Canary
WARF's history. This year we're seven and a half percent higher than the last year record We're going to be over seventy million visitors this year through our retail centers. So that just shows you the power of people not only coming back, but then the neighborhood that's emerging and now is becoming a destination in its own right in terms of all the amenities and restaurants that we've got.
But are you finding that your companies there are feeling under pressure to put on or to brag about and to say, there's all these amenities here and come back not just because you work here, but also because we're going to put on this event, or there's going to be this social gathering, or there's going to be this you know, gym that you can go into your lunch hour. How much a company's feeling that they have to offer that sort of incentive, I.
Think it all was on. Every company's culture is different and they're all approaching it differently in how they're trying to, you know, empower and engage their workforce, and so I think it's a company by a company decision. I think we're very fortunate that we've got some companies that are at the leading edge of that in terms of like JP Morgan Morgan Stanley City Bank that are doing that. Barkley's even in fact, so I think we're beneficiars of that.
But I think that's my case about the profitability. It's really culture by culture of what each company is kind of promoting to its workforce.
I mean, you're building a massive new space, a one hundred and twenty thousand square feet without knowing who the tenants are. Wo'd be your dream tenant? Is there a company that's particularly you know, fun, attractive, sexy that you think will attract more residents or workers there.
We've bought a new building unfortunately.
I mean, our building is pretty cool.
It is. It's not actually one company. It's basically an ecosystem because given that scale of that building, the idea is to bring in in incubators. So that we've already done that it would work. We've a lot of launched forty thousand square feet of wet lab space eighteen months ago and that's full of currenting these small incubators that are on their Series A and Series B round and incubating where they'll take you know, a couple of deaths
to two thousand square feet. So that's one section of it. The next section would be you know, those mid market companies that have gotten past that and growing stage, and then the last would be the big pharmaceuticals and so forth. So what we're trying to do is create a vertical campus so to speak, that not only has the benefit of the great labs that will be that are in short demand, but then again the placemaking that think about it.
If you're a company that's coming into London, can there a work group can provide housing for your workforce, We can provide the hotels, we can provide events space. We as a company can curate all of that to help them come in and have their business up and running.
Is there a name you know? Is it an Apple Google that you think? You know, if they take a large chunk of that space, then it will have that wow fact or that cool factor.
I think, Well, you know, we'll target some of the big pharmaceuticals that will want to have a big presence here is tart inter my analogy of the three ecosystems, that pharmaceutical company would be that third thing of being to have a major pharmaceutical that would come in here, and again we would provide the full suite of services for that.
That sort of incubator style ecosystem you described, and that's obviously contingent on a healthy startup scene and an indicator of a healthy economy. I mean, we're getting some slightly worrying numbers now about business confidence here. You know, the labor government been criticized maybe talking down the prospects of Britain. You're kind of at the front line of seeing this, right, if you're seeing tenants coming in, what's your sense of
that part of the economy, the entrepreneurship, the startups? Are you optimistic? Are you're waiting for the budget? Like what is what are the vibes?
I think everybody's waiting for the budget, so we'll kind of see what that is. But I think again in this kind of like did you know did you know that Level thirty nine existed Canary Wharf? Are you guys familiar with that?
So?
Level thirty nine was a tech incubator that started ten years ago. Okay, right, Revolute came out of that when we started with a couple of desks, and now I think they're probably Europe's or at least the UK's largest private company. So we've got a community about one hundred and eighty companies there. It's full. We've got two floors. We're actually thinking of expanding to the third floor now.
And what we did for the tech community initially fintech, we expanded into cybersecurity, and now we're expanding into clean tech and life science is where we've got now life science companies that are in there, so that ecosystem exists. Ironically, right now, the UK is seen as a stability relative to the rest of Europe, and I think the government has a great opportunity now to you know, they're talking about growth and so how do they incentivize companies to
invest and expand in the UK. They've got a great opportunity now to make that happen.
Yeah, and we've got the Investment Summit coming up correctly this month. If you're a startup, would you say, you know, the options in someone like Paris, which is obviously made a big play for some of these companies as well, or Berlin or anyone else in Europe. Do you think London looks still very attractive? Absolutely?
I mean I think, you know, this is one of the reasons I came from the US to London. It is a world class city. It's got unbelievable university's top you know, ten universities here, the rule of law, of the language, the time zone, the cultural of attraction of London. It is a fantastic city and so everyone wants to come to London, right And I think from the government's point of view, just got to give them that little
bit more incentive. Because businesses have choices. They can go to India, China, the US, the EU, Brazil, lots of big economies are out there. But you've got all these advantages. You just got to give them a little incentive to say, yeah, it's great to be here.
So you also have two very generous owners Brickfield and the Guitar Investment Authority invested some four hundred million pounds in their long term commitment to Canary Wharf. Do you worry about finances? You have a couple of bonds coming up to maturity in April. Like there's always a problem of timeline. What you set out to do needs to be done to make sure that the finances work. Are you comfortable with that that will work out?
Absolutely? And I think just to rewind of how this happened is we had that retail portfolio. Do that maturity came up in twenty twenty, so you got to rewind twenty twenty. We were in the midst of the pandemic. Everyone was running away from retail. No one wanted to touch it with a ten foot poll, right, So we went to the markets and we're able to go to the corporate bond market. Fast forward. Now, retail is thriving.
As I mentioned, the statistics are ny is growing adically and we've had incredible appetite from the from the lending community, and so we think we can pretty successfully take the bonds out refinanced them with our retail assets.
Interest rates are much higher they are they are, so that's going to be Is it complicated?
It's that complicated. I think, well, you know the UH. I think we've come off the lows in terms of you know where real estate values, so I have been interest races have started now to decrease, and I think we're off the troughs and going up. I think it'll just be a question of timing of when we can get it, but you know, we'll meet the market.
The most important question is where's Dave taking us for luncheon? Canary Wharf, what's the place he's got eighty choices. Don't give them too many choices.
Just one ass me that and it's like my favorite child. I can't, I can't afferciate, and I would I would upset one of them if I said, anyone.
Come on, joby one, give us the two top.
I'll give you the two that have just recently opened. So we've we've constantly been opening up restaurant after restaurants. So Road just opened up, and wood Wharf and then Marslene Varda, which opened on one of our floating pavilions. Those two just open up in the last two months, and they're outstanding.
You're taking notes. Thanks for listening to this week's In the City from Bloomberg. This episode was hosted by me Francin Laqwa, with David Merritt and Allegra Stratton. It was produced by Summersai, production supports from Isabella Ward and Louren Tavner, and sound designed by Moses and am Brendan Franz Newman is our executive producer. Sage Baumann is head of Podcasts Special Thanks to show by Kahan. Please subscribe, rate, and review wherever you listen to podcasts.