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The Canary Wharf Group office building threw another £180 million in value last year, with the latest indication of stress in the commercial office market.
Independent evaluators marked down CWG-owned offices from 4.1% to £4.2 billion at the end of 2024.
But the decline was far more intense than in 2023 when the office dropped out of £944 million. In the second half of 2024, the rating was only 0.7% slip.
Stabilization is a positive signal for the office sector, struck vacancies remaining after workers adopted hybrid work during the Covid-19 pandemic and adopted funding costs in the face of higher interest rates.
Canary Wharf is more influenced than central regions such as the city of London.
Some of the most well-known tenants, including HSBC, State Street and Clifford Chance, have decided to move their offices away from real estate, despite the expansion of their leases by Barclays, Morgan Stanley and Revolut.
“We made good progress in 2024. As expected, our ratings have been stable later in the year,” said Chief Financial Officer Becky Worthington, adding that the group has made a strong start to the year with demand for “active” leases at the highest level we’ve seen in the last five years.
Owned by Brookfield and Qatar Investment Authority, CWG is diversifying away from office space and looking to expand its home and retail footprint.
Last year, retail assets rose in value, which helped offset some of the decline in offices.
The real estate reported that the value of its 1.2% property holdings has dropped to £6.8 billion. I posted 14.7 drops the previous year.
Despite the relative stabilization in group evaluations, Canary Wharf occupancy fell slightly to 88.2% at the end of last year, down from 91% the previous year.
According to data provider Costar, the Dockland area estimates that the vacancy rate in London’s main office areas is 18.5%, potentially rising to 30% in the coming days after major tenants such as HSBC and State Street set off.
The landlord completed several major refinancings that culminated in Apollo, a private capital group in the US, and loaned £610 million to pay off the bonds, allowing the property to refinance at higher interest rates.
The agreement prevented Canary Wharf from incurring large amounts of debt before 2028. The CWG secured £2 billion in funding last year.
The group that attacked 70 new retail leases last year said revenue from rent collected in retail buildings such as shops and restaurants has risen by £2.6 million throughout the year to £71 million. CWG said retail occupancy has risen from 95.6% to 97.4%.
