Blackstone has halted plans to sell the Canary Wharf tower for £250m as companies and investors shun office space within the financial district.
A US private equity company had exclusive discussions with an Asian investor to sell Cargo at 25 North Colonnade. The building has 15 floors.
Bloomberg reported that discussions had broken down due to a change in public sentiment. Blackstone has put the process on hold.
A spokesperson said: “This modernised office building is fully leased and we aren’t forced sellers.”
Canary Wharf is now facing a new setback as it faces serious questions about its future, given the increase in home-based work and the pressure of rising interest rates on office values.
A discount of £160m was offered on the sale of a 5 Churchill Place office building earlier this month.
HSBC and Credit Suisse have also announced their intention to leave Canary Wharf.
Blackstone purchased Cargo in 2014 for £163m. Canary Wharf was the home of the Financial Conduct Authority until 2018, when it moved to Stratford.
Blackstone spent approximately £100m on refurbishing the tower block of 390,000 sq. ft., adding lobbys, office floors, and 2,000 sq. m. more terraces.
Market Halls, a food hall operator, has leased the lower floors of the tower.
Commercial property values are falling due to rising rates and declining occupancy levels. Canary Wharf is experiencing a crisis that is especially acute. The area is still struggling to generate demand, even after the Elizabeth Line opens in 2022.
CoStar data shows that only four deals have been made in the Docklands since the outbreak of the pandemic. The amount of empty office space has risen to 16pc, the highest in recent years.
Canary Wharf Group – which owns large tracts of land in the district – received a cash injection of £400m last year, from investors including the private equity group Brookfield, and the Qatar Investment Authority.
The area is looking to attract more life sciences companies in order to replace the financial firms that have left.
The group also plans to convert a few empty office buildings in residential properties.