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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 push their staff return to the office.
The US bank began renovating the 42-storey building at 25 Canada Square in 2022, when it was reported the cost would be more than £100 million.
People close to the project said this figure was never realistic, however, and that projected costs have reached more than £1 billion. Citi said on Thursday that the £100m figure was incorrect and had never been publicly confirmed by the bank.
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 lease its office space.
The award for the project, which is expected to be completed in 2026, marks a major investment by Citi in improving the quality of its London workspace as banks lure 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 cut costs and boost the bank’s profitability.
The award also highlights the staggering costs 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 docklands, is planning a radical refurbishment 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 renewal after the law firm’s lease expires in 2028.
Citi’s ambitious plans for its project include knocking down floors and adding new stairs to create multi-level “villages” for different teams.
The center of the tower will feature a three-height ‘winter garden’, with more gardens in the client’s entertainment space 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 much 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 reduced the value of its office portfolio by 26 percent since 2019, according to company reports.
Morgan Stanley is also set to launch a refurbishment of its Canary Wharf building, but will receive £150m towards costs from CWG as part of a deal to extend its lease by a decade.
JPMorgan Tower, which it bought after the collapse of Lehman Brothers, is also in line for renovation.
