Rescuer of Canary Wharf gets ready to take wing again

THE TUESDAY INTERVIEW; Sir Peter Levene; 'I was never a property guru. Collecting rent is not what I want to do for the rest of my life'
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Sir Peter Levene is considering his options for new employment having completed a two-year stint as chief executive of Canary Wharf, the London property development. While he will probably continue as a personal adviser to the Prime Minister on efficiency issues, he has not yet decided whether he will take up another large job in the City or industry.

People close to him at Canary Wharf say his best qualities are his abilities in sales and marketing. He says they were at a premium when he took the helm at Canary Wharf in December 1993 as it came out of administration.

Sir Peter said: "In the beginning, Canary Wharf was a very high quality development, put up on what was previously wasteland. The people who built it did a very good job and that the project didn't succeed was a great disappointment. It was the largest development in Europe and that it turned into a failure was bad for London's prestige as well as the money and the effort that had been wasted."

Sir Peter now reckons that people accept Canary Wharf as an asset, an important business district to rank alongside the West End and the City.

"The two things that killed it were the recession, when no one was taking space anywhere, and the idea that you couldn't get there. Now the recession has lifted and road and rail links are in, and the Jubilee underground extension will be terrific."

Sir Peter originally became involved in Canary Wharf in 1991 when the Government asked him to sort out the Docklands Light Railway, then Canary Wharf's only real link with the centre of London. As chairman of the DLR, Sir Peter gradually turned the disaster around and at the same time got to know Paul Reichmann, one of the three Reichmann brothers who developed Canary Wharf.

Mr Reichmann asked Sir Peter to take over the running of Canary Wharf before the general election of April 1992 but he refused.

He said that while the development had been well built it was already too late to save it from some form of bankruptcy. The key error that the Reichmanns made was to bring in North Americans to run the scheme, executives who failed to gel with the English way of doing things, according to Sir Peter.

The project went into administration and at the end of 1993 the 11 banks that had taken over the ownership asked Sir Peter to take over as chief executive and refloat the business out of bankruptcy.

Sir Peter recalls that for the first two to three months he was solely employed in going around the development asking people what their concerns were. He says there was a lack of shops and people and that the infrastructure was lacking. The most important thing to change was public perceptions, he says.

By November 1993 road and DLR links had been completed but there was a long time-lag between their completion and the public waking up to the fact that Canary Wharf was accessible. It was an uphill struggle, he remembers. He embarked on a round of corporate visits in an attempt to persuade potential tenants and opinion-formers that Canary Wharf was a viable place to work.

He recalls a chicken-and-egg situation. The large employers complained that there were no restaurants, while the restaurant owners complained that there weren't any people.

Sir Peter said: "This is why the arrival of Tesco has been so terribly important. It is providing a service for 14,000 who work at Canary Wharf. Marks & Spencer were playing with the idea of coming here for ages, but decided not to go ahead - one of their biggest mistakes. There are now over 50 shops and restaurants here."

Sir Peter identifies the arrival of BZW, Morgan Stanley and Tesco about a year ago as the turning point for him. While he always thought the project would work, it happened a lot quicker than he and the banks expected. When he took over, the banks' recovery plan forecast that they would not get all their money back until the year 2007. In the event, Mr Reichmann came back with a new consortium of investors to buy back the scheme from the banks for pounds 800m, a deal completed just before the new year.

With the recovery from the depths of the recession, Canary Wharf has succeeded in attracting tenants. It has gone from being only half-let when Sir Peter took over to over 80 per cent let now.

Sir Peter admits many of the early tenants were attracted by generous rent-free periods. He says that, with the new demand for space in Canary Wharf, this has decreased. When he took over, there was a 40 per cent difference between rents in the City and the West End and those in Canary Wharf. This has narrowed to 20 per cent.

There has been an acrimonious row between Sir Peter and the Corporation of the City of London, with the Corporation accusing Canary Wharf of attempting to poach key financial institutions from the Square Mile. Sir Peter has always been emollient on the subject, and says, " I hope that this big argument with the City will dissipate. I said at the beginning that it was an over-stated problem, and I still believe that. Operations that want to be 100 yards from the Bank of England will stay there. Canary Wharf is complementary to the City."

Paul Reichmann asked Sir Peter to carry on as head of Canary Wharf but he felt he had completed his job. "I think I've done what I wanted to do. I was never a property guru. Collecting rent is not what I want to do for the rest of my life. Canary Wharf was a disaster and has been put back on its feet."

Sir Peter's name has been linked by the City rumour mill with the succession to the chairmanship of GEC, but he has refused to speculate on his future. However, as a past head of procurement for the Ministry of Defence he is obviously well suited. As the architect of the rescue of Western Europe's largest property development he can obviously take his pick of a wide range of lucrative offers.