After more than two decades, the final part of the master plan for London's Canary Wharf is finally taking shape with the construction of a 20-storey tower at 25 Churchill Place.
The latest addition to the Docklands skyline will add another 500,000 square feet of office space, half of which is already pre-let to the European Medicines Agency (EMA). And, despite the economic storm clouds darkening the horizon, developer Canary Wharf Group (CWG) is confident that by the time the building opens its doors in 2014, the rest of the space will also be filled.
Docklands offices are already 97 per cent let, the company says, and demand will spike in the medium term as shortages caused by the development hiatus from the 2008financial crisis hits.
"Going ahead with Churchill Place is a vote of confidence in Canary Wharf," a spokesman for CWG said. "There's always boom and bust in the London property market, and we're expecting a shortage in 2013-14."
London's commercial property market is proving resilient in the face of growing global uncertainty. According to Investment Property Databank, capital growth in the sector nationwide slowed to 0.4 per cent in the second quarter, the lowest rate since 2009. But central and inner London is roaring on at 2.3 per cent, thanks to the capital's status as a "safe haven" from the uncertainties lashing economies across the world.
Office construction across London is also swinging back after the downturn, with 6.4 million square feet now under construction, compared with 2.7 million six months ago, according to Deloitte's Cranes survey.
For Docklands, the tower at 25 Churchill Place is the last piece in the development begun in 1988. Since then, the area has been transformed beyond recognition. What was once an industrial wasteland of disused warehouses and derelict waterways is now a second financial centre, its 35 spanking-new buildings served by more than 200 shops and restaurants and interspersed with 20 acres of landscaped public space. Canary Wharf counts Barclays, Citigroup and Clifford Chance among its big-name tenants, and its 15 million square feet of office and retail space support a daily army of 95,000 workers, set to rise to 105,000 next year.
The development has a tricky corporate history. But it is difficult to over-estimate the difference that Canary Wharf has made to the capital, according to Nick Shepherd, a managing partner at Drivers Jonas Deloitte. "Docklands has the single biggest impact on London's continued success as a financial centre," he said. "Only Canary Wharf was able to deliver buildings of the size and quality that commercial enterprise needed."
Where the City of London, just a few miles to the west, was constrained by its limited space and restrictive planning rules, Docklands was designated a simplified planning zone that cut out local interests and allowed developments on a scale and of a pace simply not otherwise possible. Add in buildings – offering vast, air-conditioned open-plan work spaces on the US model, rather than the old-fashioned, cramped, cellular offices typical at the time – and rents some way below those in the City, and it was a compelling proposition.
"For its occupiers, Canary Wharf has worked fantastically well – delivering an endless supply of high-quality buildings in a fabulous location and at a price that has not changed materially for a very long time," Mr Shepherd said.
Docklands is not the only area of London that has been transformed. "Canary Wharf has had more impact on the development of the City of London than the Luftwaffe did in 1940," Mr Shepherd said. "It gave the City a massive shake-up, because it was forced to compete."
Even with 25 Churchill Place, it is not over yet. In Docklands itself, there are another 10 million square feet of land adjacent to the existing site, with planning consent in place, ready for building to go ahead as demand arises. CWG is also broadening its horizons.
The group's first non-Docklands development has already been completed, with the sale of the Drapers Gardens development to Evans Randall for £243m last August. CWG has also set up a joint venture with Land Securities last October to build the 36-storey tower, dubbed the "walkie-talkie", at 20 Fenchurch Street, in the heart of the City. And last month, the group won the contract to redevelop oil giant Shell's five-acre headquarters site at Waterloo.
Mike Phillips, at Property Week, said: "CWG has been planning for this moment, for the day when the core estate would be finished."
1980: The last of the vast complex of docks in east London is closed, leaving eight square miles of derelict industrial land.
1985: The Government designates Docklands an enterprise zone, with tax breaks offered in return for redevelopment.
1988: Canada's Olympia and York starts construction of the first major office development at Canary Wharf.
1991: The first buildings are completed, including One Canada Square, the UK's tallest building.
1992: Olympia and York files for bankruptcy, hit by the post-Thatcher recession, delays in the construction of the Jubilee Line and companies' reluctance to relocate from central London.
1995: An international consortium, including the Reichmann family, who set up Olympia and York, take over the scheme, forming the company that becomes Canary Wharf Group (CWG).
2004: CWG is taken over by Songbird Estates.
2009: With CWG suffering from the Lehman Brothers collapse, Songbird is bailed out by a £880m rescue rights issue that leaves the Chinese and Qatari sovereign wealth funds as its biggest shareholders.
1 Canada Square
Completed in 1991, the 770-foot tower has 29 tenants including Euler Hermes, JP Morgan and Trinity Mirror
25 Canada Square
A 42-floor tower completed in 2001, forms the Citigroup Centre along with neighbouring 33 Canada Square
8 Canada Square
Completed in 2002, the 665-foot, 42-storey tower is the global headquarters of HSBC
25 Bank Street
Completed in 2003, tenants of the 33-storey tower include Nomura, NYSE Euronext and Jones Lang Lasalle
40 Bank Street
Completed in 2003, tenants include of the block Allen & Overy, China Construction Bank, and Duff & Phelps
10 Upper Bank Street
Completed in 2003, the tower is the world headquarters of Clifford Chance. Other tenants include Infosys and MasterCard
20 Canada Square
Completed in 2003, now occupied by McGraw Hill, Standard and Poor's and BP
1 Churchill Place
Completed in 2005, tenants include Barclays and BGC International
5 Churchill Place
Completed in 2009, the building now occupied by the stockbroker MF Global
20 Churchill Place
Completed in 2010, now occupied by State Street, the US investment management group