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Citigroup is on course to spend more than £1bn on the overhaul of its Canary Wharf tower, a sign of the huge costs involved in upgrading older skyscrapers as banks try to push their employees back to the office.
The US bank launched the refit of the 42-storey building at 25 Canada Square in 2022, when it was reported that the cost would be more than £100mn.
People close to the project said that figure had never been realistic, however, and that the projected costs have reached more than £1bn. Another person familiar with the project said the £100mn figure was inaccurate and had never been publicly confirmed by Citi.
The cost of refitting the almost 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 lease its office space.
The price tag for the project, due to be completed in 2026, marks a major investment by Citi into improving the quality of its London workspace as banks cajole reluctant workers back to offices.
But it also comes as Citi is undergoing a turnaround under chief executive Jane Fraser, who is under pressure to reduce expenses and boost the bank’s profitability.
The price also highlights the eyewatering costs of breathing life into ageing skyscrapers at a time when many towers, both in Canary Wharf and other centres around the world, need major overhauls.
Canary Wharf Group (CWG), the docklands landlord, is planning a radical renovation of the 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 a refit after the law firm’s lease expires in 2028.
Citi’s ambitious designs for its project includes punching through floors and adding new staircases to create multilevel “villages” for different teams.
The centre of the tower will feature a triple-height “winter garden”, with more gardens in the client entertaining space at the top. There will also be extensive work to update mechanical systems and the facade.
Citi considered knocking down and rebuilding the tower before launching the project, but decided to go ahead with the renovation because reusing the existing structure was more sustainable, albeit considerably more expensive.
The purchase of the César Pelli-designed tower, which was built for the bank by Canary Wharf, was one of the most expensive property sales ever in the UK. CWG has marked down the value of its office portfolio by 26 per cent since 2019, according to company reports.
Morgan Stanley is also about to embark on a renovation of its Canary Wharf building, but will receive £150mn towards the cost from CWG as part of the deal to extend its lease by a decade.
JPMorgan’s tower, which it acquired after the collapse of Lehman Brothers, is also in line to be renovated.
Citi declined to comment.
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