Canary Wharf battle looms

JOHN WILLCOCK

Financial Correspondent

The war between Canary Wharf and the City for lucrative institutional tenants is set to intensify following Paul Reichmann's success in buying back the Docklands development.

Michael Cassidy, who chairs the policy and resources committee of the Corporation of London, played down the significance of the Reichmann deal, saying it would not make a huge difference. Mr Cassidy said the City was in a stronger position than for many years to repulse the Docklands development's attempts to poach tenants.

He said ABN Amro, the Dutch bank that owns the broker Hoare Govett, had been offered the top eight floors of the Canary Wharf tower but preferred moving to new offices within the City.

An ABN Amro spokesman confirmed last night that it had long wanted to combine all its banking activities, including Hoare Govett, under one roof.

A site in Spitalfields was the current favourite, he said, with the old Mirror Group building in Holborn Circus considered a possibility.

Mr Cassidy said: "ABN Amro prefer a City site. We are allowing them to buy the freehold, which we don't normally do, because that is what Continental banks prefer."

The City chief said that others seeking new offices in London included Merrill Lynch, Citibank, HSBC/Midland, Liffe and West Deutsche Landesbank. He had been horrified that BZW had failed to consult the Corporation when it decided to move a large number of employees to Canary Wharf last spring.

But Deutsche Bank's decision in the summer to keep its combined investment bank with Morgan Grenfell in the City had been a turning point. He said the City has better transport links, especially to Heathrow, the most important airport for international business.

People would still prefer to walk between meetings, Mr Cassidy said, and the quality of the City's environment wasincreasing because of the "ring of steel" set up following the IRA's Bishopsgate bomb.

"We have reduced road accidents and pollution because of this, and street crime is down by a third," he said.

Michael Pickard, chairman of the London Docklands Development Corporation, is jubilant over the Reichmann deal.

Together with lettings of nearly 1m sq ft in the last six months, it would secure the project's long term future, he said. "Canary Wharf offers space on a scale simply not available in the City."

Comment, page 21