Barclays to quit City for Canary Wharf

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After 300 years of being based at Lombard Street, Barclays Bank is to move its head office to Canary Wharf, in a further sign that large companies are deserting the Square Mile.

The bank said it had spent two years scouring the City and West End for a suitable site but only Canary Wharf, in London's Docklands, fitted its needs. It will have a 1 million sq ft building there, 30 storeys high.

Matt Barrett, Barclays' chief executive, said: "Barclays staff are currently dotted around London in sites across the City and West End. Bringing most of them together into one site would allow our businesses and head office functions to work more efficiently."

Although Lombard Street is the bank's headquarters, staff that cannot be accommodated there are currently scattered over a dozen locations.

Barclays can bring together 5,000 workers at Canary Wharf. The Docklands site offered a degree of flexibility that, Barclays said, was not available elsewhere. Although the new building, due for occupation in 2005, measures 1m sq ft, Barclays will occupy 650,000 sq ft of the space initially. The rest will be made available when the bank needs it.

A series of major international banks have moved to Canary Wharf, such as CSFB and Morgan Stanley, but Barclays is the first large UK retail bank to move to the site. Canary Wharf shares closed up 18.25p to 542.5p yesterday.

Companies that need large amounts of accommodation have left the City, where suitable buildings are hard to find because of planning and space constraints.

Paul Reichmann, Canary Wharf's chairman, tactfully said: "Barclays' decision reaffirms that the City and Canary Wharf ... are a growing single economic and business entity representing the dominant financial centre of Europe."

Colin Hargreaves, a partner at the property advisers, Healey & Baker, said that assembling a site in the City for a building of 1 million sq ft took many years, as it was likely to be owned by several parties and there were planning hurdles to overcome. He estimated that Barclays would pay around £40 per sq ft annually at Canary Wharf, compared with about £55-60 per sq ft if they relocated in the City.

"There is a danger that unless the City starts to provide big sites, we will end up with a financial centre which does not have any major banks. It will just have lots of smaller occupiers," he said.