Canary Wharf Group has submitted plans for a vast “vertical” life sciences campus, as the owners of the east London district look to break their reliance on financial services as demand for office space falls.
The new 823,000 sq ft, 23-storey tower block would be among the largest laboratories in Europe and would cost £500mn to develop.
It would form part of a new quarter in the northern area of Canary Wharf that the group plans to develop into a life sciences centre, as some of its traditional financial services tenants consider relocating or downsizing.
The office vacancy rate in Docklands, which includes Canary Wharf, has risen to about 15 per cent — the highest in London, according to property data company CoStar.
Canary Wharf, which has been synonymous with finance since banking skyscrapers were built in the old docks in the late 1980s and early 1990s, is now under increasing pressure to diversify its income.
Some tenants, including Barclays and law firm Clifford Chance, are planning to depart or downsize in Canary Wharf, while HSBC is reportedly reviewing its space requirements.
During the pandemic, the amount of available space in the neighbourhood reached close to 3.5mn sq ft, above financial crisis levels, according to CoStar. Financial institutions still make up half of CWG’s tenant base.
This month, credit rating agency Moody’s placed CWG’s rating on review for a downgrade and warned of “drops in office values that could be as high as 10 per cent to 15 per cent in the next 18 months”.
CWG, owned by the Qatar Investment Authority and Brookfield Property Partners, is betting that lab space, which is undersupplied across the country, will have a better run.
Shobi Khan, chief executive of CWG, described submitting the plans as a “major milestone” and has previously said the addition of lab space would create “Canary Wharf 3.0”.
The high-spec lab, planned with specialist investor Kadans Science Partner, would meet the highest energy efficiency standards and come with a “sky lounge”, said the landlord.
Investors have raised billions of pounds to invest in UK lab space since 2020, with the outbreak of the pandemic that year providing a boon for the life sciences sector.
The bulk of that cash has been spent in the “Golden Triangle” covering Oxford, Cambridge and London, targeting areas with high quality research universities, existing lab space and medical facilities.
Most investment in London has targeted the so-called “knowledge quarter” around King’s Cross, which includes University College Hospital, the Crick Institute, the Wellcome Trust and a number of universities.
Canary Wharf, which has also made a foray into rental housing, is coming from a standing start.
Khan has said the recent opening of the Elizabeth Line and proximity to Queen Mary University of London and the Royal London Hospital will help CWG fill the 23-storey, energy efficient campus and enable the landlord to bank higher, more sustainable rental income.