- HSBC's London office will get a radical makeover due to hybrid working.
- When the bank leaves its Canary Wharf HQ in 2027, the tower will become a multi-use building.
Commercial property values have been hit hard as workers continue to shun offices following the pandemic.
The rise of hybrid work means many companies now have largely empty offices in buildings that are worth far less than they were just a few years ago.
Canary Wharf Group (CWG), a property developer that manages much of the financial district in east London, thinks it has one answer to the problem.
In 2027 HSBC will move out of the 45-floor tower completed in 2002. The group plans to turn the skyscraper into a "unique destination" that will no longer be used solely for office space.
Rather than leasing the space to new corporate customers, the building will be divided into a combination of workspaces, leisure, entertainment, education, and cultural attractions.
Renderings show how parts of the building will be carved out to make room for spaces including terraces, gardens, a viewing platform and even a rooftop bar.
A commercial area, complete with a water feature and spiral, red staircase for pedestrians is also planned.
CWG called the plans "one of the world's largest redevelopment projects." The project is due to be completed by 2030.
Global banks including Credit Suisse, JP Morgan, Deutsche Bank, and Citibank also have high-rise offices in Canary Wharf.
However, CWG's plans signal that single-use office spaces are no longer attracting enough revenue for property owners.
Office occupancy rates remain at record lows, pushing down the value of corporate real estate and causing interest rates to spike.
The situation is "a train wreck in slow motion" for the real estate sector, according to Stijn Van Nieuwerburgh, a Columbia Business School real estate professor.
Although companies have tried their best to encourage, or even force, workers back to the office, many have rejected their efforts, leaving plenty of desks empty.
The crisis in real estate is converging with another trend in urban development: creating more liveable urban centers.
The "15-minute cities" idea involves developing neighborhoods where residents can work, shop, and play within a 15-minute journey by foot, bike, or public transport ride from where they live.
The concept has been trialed in Portland, Oregon, and Paris.
With about 67 million people visiting Canary Wharf in 2023, CWG said meeting visitors' needs played a big role in the revamp.
"This redevelopment is another step in Canary Wharf's evolution into a vibrant mixed-use neighborhood offering workspace, retail, homes, leisure, and amenities all in one location — a true 15-minute city," said Shobi Khan, CEO of CWG, in a press release.