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Citigroup is on track to spend more than £1bn refurbishing its Canary Wharf tower, a sign of the huge costs involved in upgrading older skyscrapers as banks try to get their staff back into offices.
Bank of America launched a redevelopment of the 42-story building at 25 Canada Square in 2022, when it was announced that the cost would be greater than 100 million pounds.
People close to the project said the figure was never realistic, and that projected costs had reached more than £1 billion. Another person familiar with the project said the £100m figure was incorrect and had never been publicly confirmed by Citi.
The cost of redeveloping the nearly 25-year-old skyscraper will be close to the £1.2bn Citi paid to buy the tower in 2019, as part of a strategy to own rather than rent office space.
The cost of the project, due for completion in 2026, marks a major investment by Citi in improving the quality of its London workspace as a bank cajole unwilling workers back to the office.
But it also comes as Citi undergoes a turnaround under chief executive Jane Fraser, who is under pressure to cut costs and boost the bank’s profitability.
The price also highlights the incredible cost of breathing life into old skyscrapers at a time when many towers, both in Canary Wharf and other centers around the world, are in need of major repairs.
Canary Wharf Group (CWG), the owner of the docks, plans a radical renewal HSBC Tower when the bank leaves in 2027, on behalf of the building’s owner, the Qatar Investment Authority.
The tower occupied by Clifford Chance could also be in line for redevelopment after the law firm’s lease expires in 2028.
Citi’s ambitious design for its project includes breaking through floors and adding new staircases to create multi-level “villages” for different teams.
The center of the tower will feature a triple-height “winter garden”, with multiple gardens in the client entertainment area at the top. There will also be extensive work to update the mechanical systems and facade.
Citi considered demolishing and rebuilding the tower before starting the project, but decided to go ahead with the renovation because reusing the existing structure was more sustainable, albeit significantly more expensive.
The purchase of the César Pelli-designed tower, built for the bank by Canary Wharf, was one of the most expensive real estate sales ever in the UK. CWG has reduced the value of its office portfolio by 26 percent since 2019, according to company reports.
Morgan Stanley will also embark on renovations at its Canary Wharf building, but will receive £150m towards costs from CWG as part of a deal to extend its lease for a decade.
The JPMorgan Tower, which it got after the collapse of Lehman Brothers, is also in line for renovation.
Citi declined to comment.
