Over nearly thirty years, developers of London's Canary Wharf had navigated the project through a variety of economic, financial, and construction crises, at times facing ruin. By 2017, the project was widely recognized as a success – an internationally recognized financial district of 16 million square feet accommodating over 100,000 workers. Yet storm clouds once again threatened the Estate, as the owners had to grapple with the fallout from the U.K.’s decision to leave the European Union (Brexit) and the rise of fintech.
Canary Wharf rose out of abandoned dockland in London’s hardscrabble East End. Encouraged by the government, developers believed they could build a financial district to rival or overtake The City, the square mile in which nearly all of the U.K.’s financial firms were located. The government deregulated the financial services industry in a single “Big Bang” in 1986. U.K. firms merged and foreign firms flooded into London, hungry for space. Paul Reichmann, the initial builder of Canary Wharf, recognized that financial institutions required large open floorplates and reliable utilities. His company, Olympia & York, built the equivalent of a new city, creating roadways, connecting utilities, erecting buildings designed by top architects and public spaces, all over the abandoned docks and waterways.
But the government reneged on its promise to provide public transportation to the site, and tenants were slow to lease space. Olympia & York went bankrupt. Subsequent developers used nearly every combination of debt and equity to keep the project afloat. They moved from privately financed, highly leveraged construction, to bankruptcy, to property securitizations, to public offerings, to private equity buyouts. The financial engineering was as impressive as the structural engineering. Eventually transport connected Canary Wharf to the rest of London and the project thrived. However, Brexit and the rise of fintech represented new challenges. Would financial firms leave the U.K.? Would fintech firms seek new kinds of space? How should the Canary Wharf Group respond?
When Canary Wharf was built, retail establishments were an afterthought, and no plans were made for residential dwellings. Now the Canary Wharf Group was looking to create more of a 24-hour community, less dependent on financial services. But what could the Group do to make Canary Wharf a true community – where people not only worked, but also lived and played?
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William N. Goetzmann, Jean Rosenthal, and Jaan Elias, "Canary Wharf: Financing and Placemaking," Yale SOM Case 17-017, November 10, 2017
- Real estate
- Urban Development
- Women in Leadership
- Asset Management
- Business History
- Innovation & Design
- Sourcing/Managing Funds
- State & Society
This Yale School of Management case has been made possible in part by the generous support of The Kenneth H. Colburn ’78 Curriculum Development Fund.