Five years after being battered by COVID-19 and the rise of home working, Canary Wharf is making a comeback.

The number of visitors traveling to the East London financial district by rail and tube has surpassed pre-pandemic levels as more bankers resume the daily trek to their desks. The area has also seen a boost in the number of weekend visitors lured by its growing roster of restaurants, bars, stores and entertainment options.

The influx was boosted by JPMorgan Chase & Co Chief Executive Officer Jamie Dimon’s mandate earlier this year that most employees turn up to the office five days a week, an edict that’s set the tone for tougher policies across Wall Street. The bank has even had to lease additional space to facilitate their return, renting several floors in the former Credit Suisse office close to the US lender’s overflowing European headquarters.

“Footfall is rising because bankers are back at their desks,” Harm Meijer, a founding partner at private equity firm Icamap Advisory and a former real estate analyst at JPMorgan said. “And also because Canary Wharf has evolved into a far stronger retail and leisure destination than it was before the pandemic.”

An average of about 91,000 daily tube, Elizabeth Line and Docklands Light Railway journeys were made to stations in October, according to a Bloomberg analysis of Transport for London data, exceeding the number for the same month in 2019. That tops the recovery in visitor numbers to London’s other key office districts in the City and West End, where a more diverse mix of tenants such as technology and media companies have taken a cautious approach to mandating a return to office.

Daily average tube and Transport for London rail visits to the West End and City of London respectively were at 84 percent and 89 percent of pre-pandemic levels in October, compared to 105 percent for Canary Wharf, the analysis showed.

Ivan Ovcharov, 53, who cleans shoes and bags in a bustling passage from the Jubilee line to Canary Wharf’s Cabot Square Mall, said he has noticed the estate becoming busier with professionals this year.

“It’s the American companies, they’ve brought their people back,” he said, before turning to return a pair of freshly polished Oxford shoes to a female customer. People are also increasingly visiting for leisure, he added.

Canary Wharf Group, the landlord that owns most of the estate and is itself owned by Brookfield and Qatar, has pushed hard to lure leisure visitors with pop-up stores, events, sports facilities, competitive socializing concepts and a partnership with the Eden Project. In all the estate now has more than 320 stores and 80 cafes, bars and restaurants.

“We welcomed 72 million visitors in 2024,” Canary Wharf Group Chief Executive Officer Shobi Khan said. “And we are approximately 6 percent ahead this year, a clear signal of the momentum behind our evolution.”

The much delayed opening of the Elizabeth line in 2022, which significantly reduces the time it takes to traverse London from west to east, was a key part of the strategy to transform the area from one dominated by captive office workers to a destination that would be bustling with life at all hours, seven days a week. 

Twin Crises

The line’s opening however coincided with real estate markets being sent into a tailspin by the abrupt end of the low interest-rate era. Borrowing costs and the lingering impact of remote working posed serious questions for the district’s owners.

Major tenants including HSBC Holdings Plc and Clifford Chance announced plans to vacate the area in favor of the more central City of London district. That echoed a trend seen across the UK capital, where tenants opted for locations with the best transport connections that would make workers’ commutes as painless as possible at the expense of more peripheral districts.  

The combination of higher rates and doubts about demand for space in the face of departing tenants caused a plunge in the value of Canary Wharf Group’s portfolio which was marked down by 14.7 percent in 2023 alone. That same year, ratings agency Moody’s downgraded its debt deeper into junk territory.

That precipitated a rash of refinancing by the landlord, including a new £610 million ($799 million) facility from Apollo Global Management Inc. The loan was secured against the bustling malls that run beneath the estate’s office buildings and which were among the first to recover from the pandemic, aided by the rapid return of office workers.

And Brookfield and Qatar injected additional equity into the company as they took a long term approach to repositioning the estate into a more diverse neighborhood, arguing the short-term headwinds would subside. 

Road to Recovery

After three years of higher interest rates — on top of two years of pandemic-era delays and disruptions to office projects — there is now a severe shortage of new high quality work space in central London. Together with Canary Wharf Group’s long journey to introduce new life to the area, it’s starting to turn the tide.

“If you wanted a million square foot office building in a highly accessible, well serviced location, then it would probably be easier to get Canary Wharf to deliver it for you than anywhere else,” Savills Plc head of commercial research Mat Oakley said. Improving transport links and amenities have also made it more attractive, he said. “It is almost getting to the point where the only reason to cross it off the list is sort of your own institutional memory about how bad it used to be.”

This year is “on track to be its best leasing year in the past decade,” for offices in Canary Wharf Brookfield Corp. President Nicholas Goodman told analysts on a call earlier this month. “The leasing pipeline is also the strongest it has been in years, underscoring the depth of demand for high-quality space.”

And that’s starting to translate to property valuations.

“We’re seeing the beginning of the reversal,” said Giulia Calcabrini, an analyst at Moody’s, the ratings company that downgraded Canary Wharf Group’s debt in the midst of its crisis.

The agency this month raised the outlook for Canary Wharf Group to stable from negative, citing improved operating performance and a planned property sales program, the proceeds of which will be used to repay higher-cost debt. Any sales would be the first for several years in the district, with the last major office to trade changing hands in late 2021 when Brookfield bought 20 Churchill Place. 

Several attempts to dispose of offices in the district have been made since, though no significant deals have been agreed. But with the outlook for rents improving, that could soon change.

Recent deals for additional secondhand space by the likes of HSBC and Banco Bilbao Vizcaya Argentaria SA as well as JPMorgan have helped improve the outlook. The vacancy rate is now close to the long-run average, according to Knight Frank, suggesting the worst of the pandemic disruption is behind the neighborhood.

The Canary Wharf office vacancy rate fell to 11.4 percent in the third quarter from 13.6 percent a year earlier, according to data compiled by the broker, albeit it was little changed from June through September.

“We do expect rents on a like-for-like basis to increase in the coming two years,” Calcabrini said. “There is demand for high-quality office space in London and there isn’t a lot of availability so that should help with rental growth.”