Private equity giant Blackstone has taken Cargo, a major headquarters development in Canary Wharf principally leased to BP, to full occupancy in a significant counterpoint to recent negativity about occupancy in the Docklands district.
25 North Colonnade was bought by Blackstone in 2014 from Evans Randall Holdings and Lone Star Bank in 2014 for £162.7 million, reflecting a net initial yield of 8%. The building was home to the Financial Conduct Authority, which left Canary Wharf in 2018 after almost 20 years in favour of a new 400,000-squarefoot HQ at International Quarter, Stratford City.
Blackstone then carried out a £100 million refurbishment programme of the 390,000-square-foot building which included the creation of statement lobbies with an upgraded facade, modern office floors with an additional 20,000 square feet, 2,000 square metres of terraces, and tenant amenities.
The property has been quietly leased up to 100% occupancy and a 12-year weighted average unexpired lease term, with the final letting just completing to Euronext, the pan-European stock exchange, CoStar News can reveal.
The ground level floors are leased to Market Halls, a food court operator providing numerous kitchens, three bars and a coffee shop with seating for 500.
CoStar News revealed in June 2020 that BP Oil had gone under offer to take around 230,000 square feet in a significant boost for the estate as the pandemic continued to force lockdowns and pause office moves. The oil and gas giant prelet the space, located next door to Canary Wharf’s Elizabeth line station, moving from the 240,000 square feet it occupied nearby at 20 Canada Square on the famous Docklands estate.
Professional services firm Boston Consulting Group signed for 50,000 square feet on the 14th, 13th and 11th floors in November of last year, while Energy Aspects and ANZ each have floors.
Euronext has now signed for 12,000 square feet in a floor subdivided with Boston it is understood to ensure full occupancy.
The success of the building flies in the face of recent negative headlines about occupiers leaving the estate, and underlines again the preference of occupiers for highly sustainable well connected modern offices.
The recent decisions by HSBC and Clifford Chance to relocate from major long-term homes at Canary Wharf and move to the City has prompted much debate about its future and need to diversify its tenant base.
According to CoStar's data, at 15.5%, Docklands has one of the highest vacancy rates in London, following more than 1 million square feet of demand losses since the pandemic struck.
That is above the central London average of 9.1% – vacancy rates are as low as 3% in some parts of the West End – and could rise further in the near term as a couple of large buildings complete construction in an environment of subdued demand.
The estate is diversifying the tenant base in response. Tech giant Apple leased a large space there during the pandemic, while Genomics England and Kadans have both signed significant lettings over the past year as the Canary Wharf Group positions Docklands as a life sciences hub.
Blackstone is advised by Cushman & Wakefield and Knight Frank.