By Dow Jones Business News,
June 06, 2014, 07:55:00 AM EDT
LONDON--Canary Wharf Group has received government approval to go ahead with one of central London's biggest real-
estate developments--a GBP1 billion ($1.68 billion) project centered on the U.K. base of Royal Dutch Shell PLC on the
south bank of the River Thames.
The 1.4 million square-foot Shell Centre project--a joint venture with the real estate arm of Qatar's sovereign-wealth
fund--was approved by local authorities last year, but was called in for review by the U.K.'sDepartment for Communities
and Local Government in September, casting doubt on whether the project would go ahead as planned.
With this approval now in place, construction can start in late summer, Songbird Estates, Canary Wharf's controlling
shareholder, said Friday.
"We feel privileged to have this opportunity to play a role in regenerating this popular but somewhat neglected area
of London," said George Iacobescu, chairman and chief executive of Canary Wharf, who led the transformation of London's
Docklands district into a financial center in the 1990s.
It will take six years to finish building the project, which will comprise 800,000 square feet of office space, 80,000
square feet of retail and leisure space, and 877 new homes, Songbird said.
Once the vacated buildings next to Shell's 27-storey tower block have been demolished, the first task will be to
construct the oil giant's new office space, said John Pagano, Canary Wharf's managing director of development. The
245,000 square feet of offices and trading floors planned for the oil giant will gather its 4,000 London-based staff
together on South Bank for the first time.
"We have a contractual commitment with Shell to build them an office building, so that will be one of the first
deliveries," said Mr. Pagano, adding that some residential units could go up at the same time.
"The South Bank market is performing very well so we're very confident in the attraction of the rest of the commercial
space," he added.
Takeup of office space in the district--better known as the home of the Tate Modern, the Royal Festival Hall, and
Shakespeare's Globe Theatre--doubled in 2013, real estate adviser Knight Frank said in March.
A company which sums up the lure of one of the area is Ogilvy & Mather, currently a Canary Wharf tenant in Docklands--
the advertising firm plans to move into a new office by the Thames next year. Other firms relocating their U.K.
operations to the South Bank include News U.K.-- a unit of Wall Street Journal parent News Corp.-- and Doha-based
broadcaster Al Jazeera.
In his report approving the development, U.K. Communities Minister Eric Pickles said: "The proposed development would
enhance its surroundings and the character of the South Bank."
The approval was one of two Canary Wharf Group was waiting for, to confirm its status as a residential developer as
well as a builder of offices. It submitted a revised planning application for Wood Wharf, a 4.9 million square-foot
development in Docklands, including 3,000 homes in December.
Canary Wharf isn't the only major U.K. developer lured into the residential property market by central London's
soaring house prices. Other large developers, including Land Securities and British Land Co., have also shifted gear,
building apartments along with office blocks.
In its full-year results in May, Land Securities--the U.K.'s largest commercial developer--hailed "the price point of
residential sales" as it reported that it presold 73% of 270 apartments to be built at developments in Kings Cross and
Victoria. It recently secured permission for a further 206 units at another London development.
Canary Wharf Group was also involved in building the London skyscraper known as the Walkie Talkie, which it developed
with Land Securities PLC.
Art Patnaude contributed to this article.
Write to Ed Ballard at firstname.lastname@example.org
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