London's Canary WharfJERRY LAMPEN/Reuters
Canary Wharf Group is to begin building the latest tower on the east London estate after agreeing to let half to the European Union's European Medicines Agency.
The 20-storey tower on the Docklands estate will also be the last under the original master plan of Canary Wharf, which was started by Olympia & York in the 1980s as part of an enterprise zone set up to encourage investment in the area.
Canary Wharf Group, the listed company that owns the majority of the estate, said on Monday that the deal was also a sign of confidence in the future of the office campus. The European Medicines Agency had been a tenant in the area in buildings not owned by Canary Wharf Group, and had chosen to commit to a 25-year lease with no breaks and five yearly upwards-only rent reviews.
EMA will pay about £46.50 ($76.03 U.S.) per square foot on 250,000 square feet of office space, but receive a 37-month rent-free period used to pay for the fit-out of the building. Canary Wharf will collect about £11.6-million in rent a year.
On the back of the letting, Canary Wharf will build a 20-storey office tower of more than 500,000 square feet at 25 Churchill Place, designed by Kohn Pederson Fox Associates. Canary Wharf decided to build the largest of three potential buildings on the site in order to create capacity to secure other tenants in future.
George Iacobescu, chairman and chief executive of Canary Wharf Group, said the lease was as safe as "AAA" debt given its length and strength of covenant. He added that the letting was a significant milestone for the group.
"This is the end of the beginning [for Canary Wharf]" he said. "The original goal under the first master plan has been achieved. This is the last piece of that puzzle, but that puzzle has grown now to our next projects."
The company has a number of other schemes in the pipeline to the north and east of the original estate, as well as the buildings intended to be the new headquarters for JPMorgan in the west of the area. Canary Wharf has also agreed to build several schemes outside Docklands, including the development of the area around the Shell Centre in Waterloo in partnership with Qatar and Wood Wharf, a 4.5 million square foot scheme adjacent to Canary Wharf.
Work on the new tower will begin in the fourth quarter of 2011. Canary Wharf Group is in advanced discussions about funding the project with a number of lenders. About 1,000 jobs will be directly supported in the construction and supply of materials and components.