London's Canary Wharf plans low-rise future

By Tom Bill

LONDON, March 22 (Reuters) - London's Canary Wharf districtis turning to smaller office blocks, apartments and street-levelshops for its next phase of development as the financial crisisbrings the era of the bank-branded skyscraper to an end.

The plan relates to a 20-acre site called Wood Wharf whichis adjacent to the main estate and aims to tap into demand from"creative industries" like fashion, technology and the media,said Songbird Estates, the majority owner of CanaryWharf Group, alongside its full-year results on Friday.

"We have the space to cater for these different types ofcompanies," said Canary Wharf Group company secretary JohnGarwood. "In Shoreditch there is not a lot of spare space," hesaid, referring to the scruffy east London area on the fringe ofthe traditional City financial district popular among fashionand media tenants.

As part of a plan to become less reliant on the ailingbanking sector, this month Canary Wharf opened an area for newtechnology companies on level 39 of One Canada Square, thearea's tallest office block.

Demand from banks for new offices has dried up in the wakeof the financial crisis and rents are dropping in some buildingsin the City district where floors are still empty.

While developers say the technology and media industrieswill buoy demand, some have questioned whether it will be enoughto plug the gap.

"The residential element of Wood Wharf makes perfect sensegiven strong demand and rising prices in central London," saidInvestec analyst John Cahill.

"But you'd have thought technology and media companies wouldprefer the West End. I can't see it being a driver for Songbirdin the way it will be for Great Portland, DerwentLondon and Workspace," he said, referring to thearea of the city popular among tourists and shoppers.

More details on how Wood Wharf will evolve over the next 10to 12 years, including the number of apartments and officespace, is due this year, Garwood said.

Songbird shares were trading up 4.6 percent at 143.25 penceat 0920 GMT on the back of a better than-forecast 10.5 percentrise in net asset value to 210 pence per share at the end of2012, said Cahill.

"The shares jump around a lot because there are so few incirculation," said Cahill, referring to the fact the QatarInvestment Authority owns just under 30 percent of the companyand China Investment Corporation controls about 15 percent.

Canary Wharf began luring major banks after it was createdin the early 1990s, with the promise of cheaper rents, largertrading floors and better-appointed offices.

It now houses most of London's large banks like Barclays, Morgan Stanley JP Morgan, most of whichare locked into long leases where rents rise each year, helpingto underpin the value of its real estate.

The company has also spread its wings in London bypartnering on developments like the Walkie Talkie skyscraper inthe City financial district with Land Securities.

It is also redeveloping the Shell Centre on thesouth bank of the River Thames with the real estate arm ofQatar's sovereign wealth fund.

In September it said it was considering construction of thefirst block of apartments on the main estate, taking advantageof rapidly rising home prices in central London, fuelledprincipally by demand from overseas investors who see the cityas a safe place to park their money in the financial crisis.