Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: Frontine. Have you been to Canari Wolf recent?
Speaker 3: I have. I have lunches. I don't know about para leges,
Speaker 3: but I do have lunches. Funny thing.
Speaker 1: The funny thing is I actually go there with my
Speaker 1: kids and for my kids because there'll be some sailing
Speaker 1: canoeing thing there. It's a different thing, it is, really,
Speaker 1: it is a very different thing. It's no longer the cliche,
Speaker 1: if that's the right word of my twenties, which was
Speaker 1: it's it's money money, money sits.
Speaker 3: See, it's funny because for me it hasn't changed at all.
Speaker 3: It's for me it's a real still office, real estate
Speaker 3: kind of environment because there are a lot of suits.
Speaker 3: Everybody works really fast and the restaurants are like busy.
Speaker 3: But you know, you can see it's it's bankers basically.
Speaker 2: But you know, the story about the Canary Wolf has changed,
Speaker 2: hasn't in the last few years from being the real
Speaker 2: rival to hear in the city to know is it
Speaker 2: in trouble or the banks giving up on it? Coming
Speaker 2: back to the fold and the square. Oh, that's been
Speaker 2: the story that we've been reading about. And as that's happened,
Speaker 2: and there's been a need for to transform itself into
Speaker 2: more residential place, more of a destination in the city.
Speaker 2: And is that for real?
Speaker 1: Welcome to the City of London, the City of the
Speaker 1: City of the City of London.
Speaker 3: The Bank, pase mind, the gap between the tree and
Speaker 3: the platform.
Speaker 4: The financial hearts of the country, the city, the City.
Speaker 1: Welcome to in the City.
Speaker 4: Stand clear of the doors.
Speaker 3: Welcome to in the City. A podcast from Bloomberg about
Speaker 3: the story is important to the City of London this week?
Speaker 3: What are office estates going to do if there's no
Speaker 3: back to the office?
Speaker 1: I'm Francis Laqua, I'm David Merritt, and I'm Alecri Stratton.
Speaker 3: And joining us on the show is Shoby Khan, chief
Speaker 3: executive Officer of Canary Wharf Group, who has worked in
Speaker 3: real estate for more than thirty years. Shelby, thank you
Speaker 3: so much for joining us. When you think of Canary Wharf, like,
Speaker 3: what's your dream template for what this neighborhood in London becomes,
Speaker 3: It's always been like suits and ties.
Speaker 4: Yeah, appreciate you. Thank you for having me. I think
Speaker 4: up it's the story of the evolution of Canary Wharf.
Speaker 4: I say, we're on Canary Wharf three point zero, and
Speaker 4: what I mean by that is that most folks in
Speaker 4: the London business community know was Canary Wharf when it
Speaker 4: started thirty six years ago. It was a financial center,
Speaker 4: got amazing financial occupiers to come. The infrastructure started, and
Speaker 4: then nine years ago we started with Canary Wharf two
Speaker 4: point zero where we started building residential and that really
Speaker 4: didn't come on to existence until twenty twenty and twenty
Speaker 4: twenty one. I mentioned earlier that people are like, well,
Speaker 4: we did this because of the pandemic. No, the whole
Speaker 4: vision was to create a mixed use city, basically a
Speaker 4: city within the city, and that started. The residential came
Speaker 4: on like three years ago. Three point zero was Hey,
Speaker 4: let's focus on biodiversity. Canary Wharf has an abundance of
Speaker 4: water and canals and so we've already got sixteen acres
Speaker 4: at park, so let's go long on biodiversity. Our partnership
Speaker 4: with the Eaton Project, with the Eaton doc opening up
Speaker 4: twos amenities you mentioned earlier. You can go swimming, you
Speaker 4: can play a paddle, you can go karts, go boats,
Speaker 4: all that kind of stuff. There's tons of amanages there
Speaker 4: because whether you live there, whether you work there, whether
Speaker 4: you play. There's something for everybody. And finally it was
Speaker 4: to attract more occupiers because we are super well connected
Speaker 4: and so we were only fifty five percent financial. You know,
Speaker 4: people look at the skyline and go, it's all the bankers.
Speaker 4: But we've evolved into a government hub. We've got life
Speaker 4: sciences now, we've got tech. Revolute is keeping its European
Speaker 4: World headquarters there, and so it's evolved into basically a
Speaker 4: city within a city, and that city in the city
Speaker 4: is basically the blueprint of how the urban environment and
Speaker 4: nature works for the benefit of humanity.
Speaker 2: We're sitting in the city of London, the historic financial
Speaker 2: center of Britain, and I remember when Canario Wolf sprang up.
Speaker 2: It was very much a rivalry, wasn't it. This was
Speaker 2: the alternative rents were cheaper. Banks are relocating from around
Speaker 2: where we're sitting now to set up shop over there.
Speaker 2: Do you see it as a rival still to the
Speaker 2: traditional city or is it evolving into something quite different
Speaker 2: or complimentary.
Speaker 4: I actually meant it to the government. We're trying to
Speaker 4: grow the pie you want to make the UK, London,
Speaker 4: especially the leading center in innovation and whether it be
Speaker 4: in tech or life sciences, and so they coexist. And
Speaker 4: I think what we're trying to do is play to
Speaker 4: our strengths and our strengths or the environment in terms
Speaker 4: of accessing the canals and accessing the parks and then
Speaker 4: having everything at your doorstep. We have eight grocery stores
Speaker 4: eight right, so it has really become a neighborhood on
Speaker 4: its own. And when you look at within one mile
Speaker 4: of Canary Wharf, there's about one hundred and fifty thousand people.
Speaker 4: That's as big as Cambridge or Oxford in terms of
Speaker 4: that scale.
Speaker 3: What's your hardest job? Is it attracting hoodies instead of suits?
Speaker 3: Does that make a difference? Like how do people choose
Speaker 3: where they want to live?
Speaker 4: I think it's mestereli. It's not about the space, it's
Speaker 4: about the place. So everyone will be going to a sustainable,
Speaker 4: green building, right, So you're going to want the best space.
Speaker 4: But in addition to that, you want place and so
Speaker 4: convenience for employees, whether they want to go to the
Speaker 4: doctor or go to the dentist, having the ability to
Speaker 4: go to health clubs, having the ability to eat out
Speaker 4: at nice restaurants. It's that whole environment, having areas where
Speaker 4: you can go have a cup of coffee on the water,
Speaker 4: being able to swim at your lunchtime, or play paddle.
Speaker 4: It's having that whole ecosystem so that no matter what
Speaker 4: you like or prefer, there's an option for you.
Speaker 1: I think I've seen some plans for how you would
Speaker 1: renovate that central tower and it's fascinating because it's so
Speaker 1: deep as a tower, isn't it that there's no natural
Speaker 1: light in the center. So the architects have had to
Speaker 1: do quite interesting things around creating deep terraces and so
Speaker 1: on to get as much light into this thing. And
Speaker 1: just talk to our listeners personally, I found it.
Speaker 3: Amazed as the old HSBC welding, which is basically like
Speaker 3: what block it's a.
Speaker 4: Block deep, and again it was built in the early
Speaker 4: two thousands. Elizabeth Line didn't exist, so that whole connectivity
Speaker 4: it's really important. It's that basically you have to change
Speaker 4: the entrance of that building because it basically dumps out
Speaker 4: in the Elizabeth Line, right, So you come out of
Speaker 4: the Elizabeth Line, you could be in that property within
Speaker 4: literally thirty seconds. So changing that whole access in the
Speaker 4: footprint and its streetscape of how it interacts with the
Speaker 4: Elizabeth Line, and then well it's got Canada Square Park
Speaker 4: on the other side, so again connectivity to green spaces
Speaker 4: and all that stuff. And then as it relates to
Speaker 4: the bottom, one of the things that we're doing is
Speaker 4: adding more cultural uses. And so shortly fingers cross, we're
Speaker 4: going to be announcing a theater is going to be
Speaker 4: coming to Canary Wharf, that we'll be playing eight shows weekly,
Speaker 4: bringing thousands of people additionally for theater and so forth,
Speaker 4: we potentially can bring a theater at the bottom of
Speaker 4: the base of those big floor plates at the bottom.
Speaker 4: And then again, if you go to Manhattan, if you've
Speaker 4: been one Vendor built or Hudson Yards or in Pire
Speaker 4: State Building, there's no real true experience of being on
Speaker 4: a rooftop in London with the outdoor. So the analogy
Speaker 4: is what's happening in Canada in that one property is
Speaker 4: happening across Canary Wharf in terms of making it a
Speaker 4: mixed uice environment not only within one building, but within
Speaker 4: the entire one hundred and thirty acres.
Speaker 2: I think it's so interesting about this cultural angler as well.
Speaker 2: I didn't realize you're building a fit today thinking about
Speaker 2: in Manhattan, where you have now the parlymer Narts Center
Speaker 2: right next to the New World Trade Center, or in
Speaker 2: Hudson Yards, which I guess is like a Canary Wharf
Speaker 2: style development in Manhattan. You've got the shed. You know,
Speaker 2: this idea that you you set up culture institutions in
Speaker 2: that creates ecosystem. I remember when Canary Wharf first started.
Speaker 2: I don't think anyone there would have thought of going
Speaker 2: to the theater over in the area.
Speaker 1: It was very much or going sailing or going down doing.
Speaker 3: But I mean I love a cultural you know, I
Speaker 3: gon next to me, but you actually moved to be
Speaker 3: closer to schools at some point, right, That's what everybody
Speaker 3: does in the UK, and New York is smaller. So
Speaker 3: if you're like one of the higher owners with a
Speaker 3: family and you're a Canary Wharf, you're a little bit stuck.
Speaker 4: We just opened Mulberry Academy School and would work this
Speaker 4: past September, so we've got an academy school that is
Speaker 4: just open now. I think to your point, Canary Wharf
Speaker 4: is very unique in that we have scale. We have
Speaker 4: one hundred and thirty acres and so we don't know
Speaker 4: all the assets right. So you've got JP Morgan City
Speaker 4: Bank on their buildings, oak trees, there a blackstone. You've
Speaker 4: got lots of different owners, but we get to curate
Speaker 4: that entire estate and that curation allows us to do
Speaker 4: lots of different things.
Speaker 3: Is it going to plan or is it harder than
Speaker 3: you thought?
Speaker 4: I think planning is much more difficult in the UK
Speaker 4: than is in the US. And the US you particularly have
Speaker 4: zoning and allows us to get on with you know,
Speaker 4: with the density and the uses. It's much much harder here.
Speaker 4: You have to do so much pre application and vetting
Speaker 4: with the local jurisdictions and so you know, we've been
Speaker 4: involved in Tower Hamlets, we've been involved in land, but
Speaker 4: we've bobbed in the city. Each jurisdiction is owned. But
Speaker 4: the planning requirements and the timeline it takes to get
Speaker 4: stuff developed is extremely.
Speaker 2: Long, and successive governments have talked about trying to unblock
Speaker 2: the pipes on that. Do you have any optimism that
Speaker 2: the Labor government are going to actually remove some of
Speaker 2: that perceived red type.
Speaker 4: Of cautiously optimistic. I think everyone in the first step
Speaker 4: is they acknowledge that there's a problem, and now the
Speaker 4: question is how to solve it and how to get
Speaker 4: you know, some central government involvement with the local jurisdictions
Speaker 4: to make it a little bit more efficient but spritly needed.
Speaker 4: And I think you know, we're one of the biggest
Speaker 4: builders of housing in terms of rental housing that we're
Speaker 4: trying to build in again in Canary Wharf. We're building
Speaker 4: different price points, so luxury, mid market, entry level, even
Speaker 4: affordable and intermediate housing. And to be able to do that,
Speaker 4: to taking market risk for four or five years is
Speaker 4: very difficult.
Speaker 1: He told to us about the phenomenon of working from
Speaker 1: home WFH. It sounds like, you know, to people, to
Speaker 1: people from home, is that to people listening? What is
Speaker 1: your analysis of, you know, the footfall of workers.
Speaker 4: Yeah, that's a great question. So let me step back
Speaker 4: in the residential population. Only thirty percent of our residents
Speaker 4: live and work at Canary Wharf, so we really established
Speaker 4: a neighborhood, right, so all the housing that we're doing
Speaker 4: that people are living there are going elsewhere, so whether
Speaker 4: it be to Stratford or to Westminster, et cetera. Like that.
Speaker 4: Because of the Elizabeth Line, the Jubilee and the DLR
Speaker 4: are getting new trains again. Those three newest activities are
Speaker 4: all through Canary Wharf. I think you know you've seen
Speaker 4: all these different companies now annow it's how they're trying
Speaker 4: to get people back to the office. It's been proven, ironically,
Speaker 4: both for being in the office and about being around
Speaker 4: blue and green green spaces. Your creativity increases your innovation creations.
Speaker 4: It takes much longer to get stuff done if you've
Speaker 4: got people in the office and remotely. Companies are realizing that,
Speaker 4: and I'd be ironic. Someone should do the study of
Speaker 4: who's profitable and whose earnings are growing versus their culture
Speaker 4: of who's in the office and who's not.
Speaker 2: I would love to see, I think right done it.
Speaker 4: We've done the study of We've done the study. We've
Speaker 4: done the study of the whole innovations in collaboration about
Speaker 4: being around blue spaces and green spaces, right, and that's
Speaker 4: been proven. To your point about our traffic, last year,
Speaker 4: we had sixty seven million people going through our retail centers,
Speaker 4: highest ever. Retail sales are the highest ever at Canary
Speaker 4: WARF's history. This year we're seven and a half percent
Speaker 4: higher than the last year record We're going to be
Speaker 4: over seventy million visitors this year through our retail centers.
Speaker 4: So that just shows you the power of people not
Speaker 4: only coming back, but then the neighborhood that's emerging and
Speaker 4: now is becoming a destination in its own right in
Speaker 4: terms of all the amenities and restaurants that we've got.
Speaker 1: But are you finding that your companies there are feeling
Speaker 1: under pressure to put on or to brag about and
Speaker 1: to say, there's all these amenities here and come back
Speaker 1: not just because you work here, but also because we're
Speaker 1: going to put on this event, or there's going to
Speaker 1: be this social gathering, or there's going to be this
Speaker 1: you know, gym that you can go into your lunch hour.
Speaker 1: How much a company's feeling that they have to offer
Speaker 1: that sort of incentive, I.
Speaker 4: Think it all was on. Every company's culture is different
Speaker 4: and they're all approaching it differently in how they're trying to,
Speaker 4: you know, empower and engage their workforce, and so I
Speaker 4: think it's a company by a company decision. I think
Speaker 4: we're very fortunate that we've got some companies that are
Speaker 4: at the leading edge of that in terms of like
Speaker 4: JP Morgan Morgan Stanley City Bank that are doing that.
Speaker 4: Barkley's even in fact, so I think we're beneficiars of that.
Speaker 4: But I think that's my case about the profitability. It's
Speaker 4: really culture by culture of what each company is kind
Speaker 4: of promoting to its workforce.
Speaker 3: I mean, you're building a massive new space, a one
Speaker 3: hundred and twenty thousand square feet without knowing who the
Speaker 3: tenants are. Wo'd be your dream tenant? Is there a
Speaker 3: company that's particularly you know, fun, attractive, sexy that you
Speaker 3: think will attract more residents or workers there.
Speaker 2: We've bought a new building unfortunately.
Speaker 3: I mean, our building is pretty cool.
Speaker 4: It is. It's not actually one company. It's basically an
Speaker 4: ecosystem because given that scale of that building, the idea
Speaker 4: is to bring in in incubators. So that we've already
Speaker 4: done that it would work. We've a lot of launched
Speaker 4: forty thousand square feet of wet lab space eighteen months
Speaker 4: ago and that's full of currenting these small incubators that
Speaker 4: are on their Series A and Series B round and
Speaker 4: incubating where they'll take you know, a couple of deaths
Speaker 4: to two thousand square feet. So that's one section of it.
Speaker 4: The next section would be you know, those mid market
Speaker 4: companies that have gotten past that and growing stage, and
Speaker 4: then the last would be the big pharmaceuticals and so forth.
Speaker 4: So what we're trying to do is create a vertical
Speaker 4: campus so to speak, that not only has the benefit
Speaker 4: of the great labs that will be that are in
Speaker 4: short demand, but then again the placemaking that think about it.
Speaker 4: If you're a company that's coming into London, can there
Speaker 4: a work group can provide housing for your workforce, We
Speaker 4: can provide the hotels, we can provide events space. We
Speaker 4: as a company can curate all of that to help
Speaker 4: them come in and have their business up and running.
Speaker 3: Is there a name you know? Is it an Apple
Speaker 3: Google that you think? You know, if they take a
Speaker 3: large chunk of that space, then it will have that
Speaker 3: wow fact or that cool factor.
Speaker 4: I think, Well, you know, we'll target some of the
Speaker 4: big pharmaceuticals that will want to have a big presence
Speaker 4: here is tart inter my analogy of the three ecosystems,
Speaker 4: that pharmaceutical company would be that third thing of being
Speaker 4: to have a major pharmaceutical that would come in here,
Speaker 4: and again we would provide the full suite of services
Speaker 4: for that.
Speaker 2: That sort of incubator style ecosystem you described, and that's
Speaker 2: obviously contingent on a healthy startup scene and an indicator
Speaker 2: of a healthy economy. I mean, we're getting some slightly
Speaker 2: worrying numbers now about business confidence here. You know, the
Speaker 2: labor government been criticized maybe talking down the prospects of Britain.
Speaker 2: You're kind of at the front line of seeing this, right,
Speaker 2: if you're seeing tenants coming in, what's your sense of
Speaker 2: that part of the economy, the entrepreneurship, the startups? Are
Speaker 2: you optimistic? Are you're waiting for the budget? Like what
Speaker 2: is what are the vibes?
Speaker 4: I think everybody's waiting for the budget, so we'll kind
Speaker 4: of see what that is. But I think again in
Speaker 4: this kind of like did you know did you know
Speaker 4: that Level thirty nine existed Canary Wharf? Are you guys
Speaker 4: familiar with that?
Speaker 1: So?
Speaker 4: Level thirty nine was a tech incubator that started ten
Speaker 4: years ago. Okay, right, Revolute came out of that when
Speaker 4: we started with a couple of desks, and now I
Speaker 4: think they're probably Europe's or at least the UK's largest
Speaker 4: private company. So we've got a community about one hundred
Speaker 4: and eighty companies there. It's full. We've got two floors.
Speaker 4: We're actually thinking of expanding to the third floor now.
Speaker 4: And what we did for the tech community initially fintech,
Speaker 4: we expanded into cybersecurity, and now we're expanding into clean
Speaker 4: tech and life science is where we've got now life
Speaker 4: science companies that are in there, so that ecosystem exists. Ironically,
Speaker 4: right now, the UK is seen as a stability relative
Speaker 4: to the rest of Europe, and I think the government
Speaker 4: has a great opportunity now to you know, they're talking
Speaker 4: about growth and so how do they incentivize companies to
Speaker 4: invest and expand in the UK. They've got a great
Speaker 4: opportunity now to make that happen.
Speaker 2: Yeah, and we've got the Investment Summit coming up correctly
Speaker 2: this month. If you're a startup, would you say, you know,
Speaker 2: the options in someone like Paris, which is obviously made
Speaker 2: a big play for some of these companies as well,
Speaker 2: or Berlin or anyone else in Europe. Do you think
Speaker 2: London looks still very attractive? Absolutely?
Speaker 4: I mean I think, you know, this is one of
Speaker 4: the reasons I came from the US to London. It
Speaker 4: is a world class city. It's got unbelievable university's top
Speaker 4: you know, ten universities here, the rule of law, of
Speaker 4: the language, the time zone, the cultural of attraction of London.
Speaker 4: It is a fantastic city and so everyone wants to
Speaker 4: come to London, right And I think from the government's
Speaker 4: point of view, just got to give them that little
Speaker 4: bit more incentive. Because businesses have choices. They can go
Speaker 4: to India, China, the US, the EU, Brazil, lots of
Speaker 4: big economies are out there. But you've got all these advantages.
Speaker 4: You just got to give them a little incentive to say, yeah,
Speaker 4: it's great to be here.
Speaker 3: So you also have two very generous owners Brickfield and
Speaker 3: the Guitar Investment Authority invested some four hundred million pounds
Speaker 3: in their long term commitment to Canary Wharf. Do you
Speaker 3: worry about finances? You have a couple of bonds coming
Speaker 3: up to maturity in April. Like there's always a problem
Speaker 3: of timeline. What you set out to do needs to
Speaker 3: be done to make sure that the finances work. Are
Speaker 3: you comfortable with that that will work out?
Speaker 4: Absolutely? And I think just to rewind of how this
Speaker 4: happened is we had that retail portfolio. Do that maturity
Speaker 4: came up in twenty twenty, so you got to rewind
Speaker 4: twenty twenty. We were in the midst of the pandemic.
Speaker 4: Everyone was running away from retail. No one wanted to
Speaker 4: touch it with a ten foot poll, right, So we
Speaker 4: went to the markets and we're able to go to
Speaker 4: the corporate bond market. Fast forward. Now, retail is thriving.
Speaker 4: As I mentioned, the statistics are ny is growing adically
Speaker 4: and we've had incredible appetite from the from the lending community,
Speaker 4: and so we think we can pretty successfully take the
Speaker 4: bonds out refinanced them with our retail assets.
Speaker 3: Interest rates are much higher they are they are, so
Speaker 3: that's going to be Is it complicated?
Speaker 4: It's that complicated. I think, well, you know the UH.
Speaker 4: I think we've come off the lows in terms of
Speaker 4: you know where real estate values, so I have been
Speaker 4: interest races have started now to decrease, and I think
Speaker 4: we're off the troughs and going up. I think it'll
Speaker 4: just be a question of timing of when we can
Speaker 4: get it, but you know, we'll meet the market.
Speaker 3: The most important question is where's Dave taking us for luncheon?
Speaker 3: Canary Wharf, what's the place he's got eighty choices. Don't
Speaker 3: give them too many choices.
Speaker 4: Just one ass me that and it's like my favorite child.
Speaker 4: I can't, I can't afferciate, and I would I would
Speaker 4: upset one of them if I said, anyone.
Speaker 3: Come on, joby one, give us the two top.
Speaker 4: I'll give you the two that have just recently opened.
Speaker 4: So we've we've constantly been opening up restaurant after restaurants.
Speaker 4: So Road just opened up, and wood Wharf and then
Speaker 4: Marslene Varda, which opened on one of our floating pavilions.
Speaker 4: Those two just open up in the last two months,
Speaker 4: and they're outstanding.
Speaker 3: You're taking notes. Thanks for listening to this week's In
Speaker 3: the City from Bloomberg. This episode was hosted by me
Speaker 3: Francin Laqwa, with David Merritt and Allegra Stratton. It was
Speaker 3: produced by Summersai, production supports from Isabella Ward and Louren Tavner,
Speaker 3: and sound designed by Moses and am Brendan Franz Newman
Speaker 3: is our executive producer. Sage Baumann is head of Podcasts
Speaker 3: Special Thanks to show by Kahan. Please subscribe, rate, and
Speaker 3: review wherever you listen to podcasts.