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The future of London’s Canary Wharf hinges on Brexit

The Canary Wharf financial district is seen in east London.

© Suzanne Plunkett / Reuters

When Toronto developer Paul Reichmann sent George Iacobescu to London in the late 1980s to scout out a derelict stretch of dockyards called Canary Wharf, Mr. Iacobescu told him to forget about it.

Mr. Reichmann ignored the advice and now, almost 40 years later, Sir George (he was knighted in 2011) is still working at Canary Wharf and overseeing an expansion that will see the area almost double in size over the next 15 years to nearly 25 million square feet of office towers, condominiums, rental apartments, social housing, retail outlets and recreational facilities. By 2030, around 240,000 people will live and work on what was once better known as the Isle of Dogs.

Of course much of that depends on Brexit and how the British government negotiates the country's exit from the European Union. Canary Wharf is particularly vulnerable since 58 per cent of the current occupants are financial institutions, many of whom depend on the EU's "passport provisions" which allow them to set up in London and operate across the EU.

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Sir George, who is chief executive of Canary Wharf Group Plc, was a vocal critic of Brexit during the June 23 referendum campaign and he still believes the Vote Leave campaign was based on lies and simplistic solutions.

"I'm still at heart a Remain supporter but it's everybody's duty to make the U.K. succeed and make the U.K. stay as the financial centre of Europe and the world," he said in an interview in a boardroom on the 30th floor of One Canada Place, the flagship building on the estate.

"It's going to be very difficult," he added. "My fear is that a lot of time will be spent in negotiating just to end up with the same thing that we had on June 23."

The boardroom is surrounded by giant models of the current 36 office buildings and the many projects under construction, including a 60-storey residential complex and several condominiums with 3,000 units in total. He pointed to each building, rhyming off the global financial players that have made Canary Wharf home. A model in another room depicts the entire city of London and shows the many transportation connections to Canary Wharf, including Crossrail, which is slated to open in 2018 and will make travel from the island to central London take a matter of minutes and to Heathrow airport take about half an hour.

Olympia & York, Mr. Reichmann's company, left long ago, filing for bankruptcy protection in 1992 before Canary Wharf could be completed. Mr. Reichmann, who died in 2013, gained control of the estate in 1995 but lost it in 2004. It is now owned jointly by Qatar Investment Authority and Toronto-based Brookfield Property Partners.

But Brexit weighs on London's commercial property market, where prices have slumped since the referendum and eight property funds halted trading in July due to a flood of redemptions. Sir George is confident Canary Wharf can weather the uncertainty. The estate has gone through three recessions and has still doubled in size since the 1980s. Occupancy is running at 98 per cent and the average lease has 14 years to run.

"There is no question in my mind that anybody is going to leave" Canary Wharf, he said. "The question is will they grow at the same pace as before? This is the big issue."

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Sir George is well aware of the challenges facing Britain. "You cannot imagine that a country like the U.K., with a high degree of civilization and with such a huge history of civilization, ends up in this circus," he said. Everything depends on the negotiating skills of Prime Minister Theresa May and her cabinet, he added, which includes several prominent Brexit backers such as Boris Johnson.

He equates the situation to Montreal in the 1970s when the Parti Québécois came to power promising independence for Quebec. Sir George had only recently arrived from Romania and was working as an engineer by day and a construction worker at night. Companies fled Montreal for Toronto in the 1970s and Sir George departed as well, joining Mr. Reichmann's Olympia & York.

"It's not absolutely comparable with London," he said. "Nevertheless, shocks to the system of this nature are not easy to take."

Like PQ leader René Lévesque, Mr. Johnson and other Brexit supporters used simple slogans like "take back control" to win over voters, he said. But Vote Leave also preyed on Britain's economic divisions and discomfort with immigration.

"Boris Johnson has run a brilliant, mindless campaign. Totally fake, but it worked," he said. "All it takes is to focus all the anger, you have to focus the anger on something, and if you say it's EU they vote against it."

Sir George, who is a Canadian and British citizen, has become outspoken on a number of issues and he has been called upon to help the government cut costs in the military and revamp the Thames Estuary region.

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Now at the age of 70, he has no plans to retire and feels an obligation to keep the legacy of Mr. Reichmann going. Once Crossrail opens, Sir George said Mr. Reichmann's dream for Canary Wharf will finally be realized, a leading financial centre fully connected to all parts of London.

"The moment you see the Crossrail arriving here, Canary Wharf has arrived," he said.

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