AllAboutFinanceCareers Finance jobs, courses & advice. All good. All in one place.

A tale of two cities

11/12/2018

The Square Mile in the centre of London and Canary Wharf to the east have housed the finance sector for decades. Yet 30 years ago, both locations looked very different. We take a look at finance’s role in shaping the architecture of London.

A tale of two cities

When Sir George Iacobescu was given the role of overseeing the construction of a financial district in London’s derelict docklands, the first thing he did was take a walk. A particularly long walk, from outside the Bank of England in the Square Mile to the disused swathes of old shipyard that once formed London’s busiest dock. It was a walk that would tether the two locations together, placing them in competition to attract the world’s most lucrative financial-sector tenants.

The site on which Canary Wharf sits today was once the centre of the East India docks—a hub of trade at a time when imports and exports kept London moving and breathing. But by the 1980s, the docklands were no longer fit for purpose; too small to accommodate the shipping containers now responsible for carrying the bulk of the world’s freight.

Canary Wharf as a financial district didn’t exist 30 years ago—not that you could tell by glancing at it. The district has a working population of at least 110,000, bigger than the residential population of Cambridge. As well as its distinctive towers, there’s a vast network of chain restaurants, bars and shops to sustain its corporate workers. But walk through its streets and you’ll get a sense of a metropolis designed and built all at once.

A lot can be gleaned from Canary Wharf’s street names. Canada Square is a nod to the Canadian engineering company Olympia and York, which made the ambitious idea for a new global finance hub into a reality. There’s also Churchill place—after Winston Churchill, and a fitting reminder of the interest afforded to the Canary Wharf project by the Conservative government of the early 1980s. Then there’s Bank Street—an invitation to the tenants for which Canary Wharf was designed.

Canary Wharf was built for bankers and also conceived by a banker. Michael Von Clemm, who at the time headed the US-based Credit Suisse, dreamed of housing his British back-office teams at the Canary Wharf site. Britain looked appealing: Margaret Thatcher had deregulated the banking and finance sectors, creating a climate for international bankers looking to expand. The international banks were less enthused, however, by the accommodation offered in London’s existing financial district: the Square Mile.

In the 1980s, the City of London couldn’t have been more different to the desolate docklands. While the East India site offered the space to build upwards and outwards, the Square Mile was (and remains) a polity in its own right, with centuries of history. The docklands purpose was mainly industrial, but the City was multi-faceted: old buildings sat alongside larger post-war developments. For the most part, the City maintained its medieval street layouts, but gave way to architectural projects such as the Barbican.

Prior to Canary Wharf, it was assumed that the City would continue to be London’s financial epicentre. After all, the Bank of England, the London Stock Exchange and Lloyds of London were all located within the Square Mile. For a while, it certainly looked that way: the NatWest Tower was built within the EC postcode in the 1970s, and at 47 storeys it was the UK’s first skyscraper.

“My main question was: are you happy with your operating premises or do you see the need to do something dramatic? What I detected was the great majority were very unhappy with their premises, but their attitude was that they had no choice.”

Other financial districts—such as New York’s Lower Manhattan—were permitted to expand with little attention given to medieval streets or archaic architecture. When US banks looked to the UK, it was this sort of unhindered expansion that they expected.

But the City of London Plan of 1985 killed any dreams of tower blocks in London’s centre—at least for a while. The plan regulated all new buildings, banning large-scale development. Everything from the street patterns to building height had to fall within a certain, traditional guideline. Buildings had to keep their existing facades, couldn’t be over a certain height and the amount of new floor space was restricted. In practice, this meant no commercial towers.

Banks at home in Thatcherite Britain, and also abroad in the US, baulked at the prospect of architectural regulation. They sought to expand flexibly, with the potential for large, open-plan trading floors. This kind of expansion was possible in a tower block, but less so in a period building.

If City-based banks didn’t notice this disadvantage already, the idea was planted in their minds by Canary Wharf enthusiasts in the early 1980s. Paul Reichmann, one of the brothers at the helm of Olympia and York, said: “I had 29 meetings with business leaders in London to see if such a project made sense. I didn’t ask them if they would move to Canary Wharf. The answer would have been no. My main question was: are you happy with your operating premises or do you see the need to do something dramatic? What I detected was the great majority were very unhappy with their premises, but their attitude was that they had no choice.”

Reichmann had his own reasons for wanting to build a financial property empire in the UK. Olympia and York had already constructed high-rise finance districts elsewhere in the world. Having multiple property development projects on multiple continents was Reichmann’s strategy to avoid financial strife in the event of an economic downturn. If US property crashed, the business could rely on the UK markets to be stable, and if things took a turn for the worse in Asia, the US and UK would most likely continue to run smoothly. This was all 1980’s thinking—nobody can blame Reichmann for failing to predict the global financial crisis of 2008.

Beyond the perceived unsuitability of the Square Mile, there was another incentive for property development at Canary Wharf. In 1981, Thatcher’s government created the London Docklands Development Operation. It promised a 100% write-off on the capital cost of any building, as well as a ten-year tax holiday, for anyone brave enough to break ground. The Reichmann brothers took up the gauntlet.

These days, Canary Wharf is a juggernaut of the business and finance sector; its distance from central London hasn’t hindered it, but rather stimulated its growth as a commercial hub. At just under 100 acres, the district is still growing. In his 2016 book The Language of Cities, Deyan Sudjic describes it as an “invasive species” that’s “spreading into the city...outgrowing the ability of any single developer”.

It wasn’t always this simple. At the start, Canary Wharf ’s bosses encountered issues in realising their vision. The buildings went up (despite protestations from some—Prince Charles reportedly asked of Canary Wharf ’s design, “Why does it have to be so tall?”), but it took some time to secure tenants. It was journalists, not bankers, who first populated One Canada Square, and they paid low rents to occupy the Wharf ’s centrepiece. The few bankers that the Reichmann brothers did entice eastwards did so in exchange for rent-free periods.

It’s hard to pinpoint exactly why Canary Wharf wasn’t an instant success. Part of the reason lay in the poor transport links—the DLR wasn’t deemed substantial enough to support commuters, and the promised Jubilee line extension encountered delays. The first towers were also completed in the early 1990s, a time of economic downturn.

There was also the challenge presented by the Square Mile. In response to the dense development looming from the east, the City also tentatively began to expand upwards and outwards. In 1986, Peter Rees replaced Stephen Murphy as the City’s planner. Rees lifted the tight building regulations placed on the City and sowed the seeds for skyscrapers. They cropped up more precariously than Canary Wharf’s expansive designs—amid existing infrastructure, on top of tube stations and among buildings hundreds of years their senior. But the Square Mile’s towers were still enough to be damaging to Olympia and York’s plans.

The City of London has a working population of 400,000, with 8,000 residents. The NatWest tower is now joined by the Gherkin, the Cheese-grater and the Walkie Talkie—buildings so visually recognisable that they have nicknames—as well as Broadgate and the Heron tower. It’s a far cry from the regulated facades and low-rise uniformity originally laid out by the Square Mile’s planners.

The building of skyscrapers in an already dense area wasn’t welcomed by all, nor was it common practice. As Sudjic observed, “Not even the unsentimental planners of Moscow have allowed high-rises in their city centre, let alone those of Paris.” The need for London to look the part as a global financial player rendered the Square Mile and the old docklands unrecognisable.

With Canary Wharf offering 16,000,000 square feet of office and retail space, and the City literally expanding its boundaries to match, there was more office space than there were businesses to fill it. Unable to contend with the sluggish rate at which tenants were moving in, Olympia and York went into administration. But rather than remaining an uninhabited monument, Canary Wharf survived its parent company’s bankruptcy. A consortium of wealthy investors paid £800 million to revive the business as Canary Wharf Ltd.

After this, Canary Wharf was officially open for business. Citibank set up shop in 1996, followed by HSBC in 1998, then Barclays ended its 315-year tenancy in the City to move east in 2005. The towers dreamed up by Von Clemm, Iacobescu and the Reichmann brothers were finally starting to fill. By 1995, Canary Wharf was 75% leased. By 1998, it was 99% leased. Today, it stands to get even bigger, with 30 new buildings in the works.

The City has tried a slightly different tack to Canary Wharf; one more reflective of its history. It continues to build high-rise skyscrapers, but with a recognition that the people who pass through its streets aren’t all finance workers.

“The City’s occupier base is becoming more dynamic, with SMEs and media companies choosing the Square Mile as their home,” said Chris Hayward, chair of the City’s Planning Commission, in an interview with Dezeen. “I am particularly proud that we’re able to make available economically inclusive spaces with free public-viewing galleries in City skyscrapers.” Perhaps in recognition of the finance sector’s demands, the City also now hosts 5 Broadgate—a 12-storey building with four trading floors of almost 67,000 square metres.

Significantly, both Canary Wharf and the Square Mile survived the financial crisis of 2008. Both have also shown enough flexibility to welcome a new kind of tenant: SMEs, start-ups and creative companies have started to appear in both locations. There are optimistic talks of a blurred boundary between the Square Mile and Canary Wharf, with enough towers to connect the two.

However, Brexit could throw a spanner in the works. Financial services want more than appealing buildings, and with the UK set to leave the Single Market, many banks and financial-services firms have stated their intent to leave for Frankfurt or Dublin. Once again, these commercial properties must face the biggest thorn in their side: the unpredictable fluctuation of the businesses inside them.

Becky Kells