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Canary Wharf mulling approaches from 30-plus hotel

operators

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Close to deal with 74-bed boutique hotel

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Landlord has faced tough time, with falling office demand

By Iain Withers

LONDON, Oct 2 (Reuters) - London's Canary Wharf

financial district wants to convert swathes of empty office

space into other uses including hotels, two executives at the

landlord told Reuters, as it responds to faltering demand for

its sprawl of office towers.

Canary Wharf is seen as a test case for re-imagining

struggling business districts, after high borrowing costs and

home working post-pandemic hammered commercial property values

globally. Purpose-built complexes like Canary Wharf, Paris's La

Defense and in many U.S. cities have been hit particularly hard.

In response, Canary Wharf plans to revitalise the area by

making it greener, revamping out-dated buildings and repurposing

some into other uses including hotels, leisure, retail, academia

and cultural uses, the executives said.

Overhauling offices will be costly, with the owners and any

hotel operators likely to face costs running into the hundreds

of millions of pounds or more.

The area's landlord, Canary Wharf Group (CWG) has had a

tricky time financially. It said in April that its property

values had fallen 15% in a year, driven by falling demand for

offices, and last month it saw its credit rating cut further

into junk territory by credit agency Fitch.

"There are certainly opportunities for us to introduce uses

which are under-supplied," John Mulqueen, chief investment

officer at CWG, told Reuters, adding hotels were a compelling

option for vacant space.

CWG, owned by Canadian investor Brookfield and Qatar

Investment Authority, is considering more than 30 approaches

from hotel operators, Mulqueen said, adding that the area's

office tenants - which include JP Morgan and Barclays ( JJCTF )

- were supportive of the idea.

"They don't want to send (staff) off to the West End and pay

300 pounds a night," he said, referring to a popular central

London district. "They'd rather keep them here."

He added CWG would be selective about hotel proposals.

By early 2025 Canary Wharf will have more than 1,000 hotel

or short-term let apartment rooms available, including at hotel

'Tribe' that opened two years ago. A 74-bed boutique hotel is

close to signing, which would open in late 2025, CWG added.

One senior London-based commercial real estate agent, who

declined to be named, was sceptical about the potential for

hotels, adding that visitors to London - including for work -

typically preferred to be in the city centre.

CWG unveiled plans in July to redevelop one of the area's

tallest office buildings, a 45-floor tower set to be vacated by

HSBC ( HSBC ), into a mix of uses including potentially a hotel.

Further buildings are likely to be repurposed, said Tom

Venner, CWG's chief development officer, although he said

offices would remain a core part of the mix.

GREEN SHOOTS?

The former docklands area is already building more flats,

restaurants and laboratories, but now more focus will be paid to

revamping the core office cluster, the executives said.

On Wednesday, Canary Wharf opened a new waterfront decking

area to the public around one of its central docks, as part of a

wider push to green the estate.

Mulqueen said office enquiries had picked up, and the

landlord was in discussions with potential tenants about taking

more than 300,000 square feet of space.

Canary Wharf will likely benefit from the lack of new office

space being built across London, Mulqueen said.

"I strongly believe in the office market in the long run,"

he said.