The Wharf, Office Rents Down, Vacancies Up

Songbird Estates PLC own around sixty one percent of the famous Canary Wharf in London’s Docklands office district. The Wharf has been hugely successful, since it was completed, around twenty years ago. Recognised throughout the world as London’s major commercial ‘hub’, and considered a true icon of office planning at its best.

However, Songbird have announced that the company was in danger of breaching the terms of it’s loan agreements, and that current financial “uncertainty” seemed set to “cast significant doubt” on being able to “continue as a going concern”.

Citibank have given the company until May 2010 to repay an eight hundred and eighty million pound loan. Rothschild & Sons have been called in to help refinancing, and talks are underway with Citigroup PLC, Songbird’s major lender. More than five hundred thousand square feet of office space in the Docklands is due for renewal over the next 5yrs and will be a huge loss in revenue for Songbird if it isn’t rented.

London has seen a sharp rise in office vacancies, with figures predicted to reach almost 14% by 2009. Nick Deacon, fund manager for Henderson Global Investors, stated that such a huge surge “would have a significant impact on Songbird”.

Bryan Laxton, of Cushman & Wakeman, stated that “the deterioration of rental income” would be “the story” for 2009. Falling rents, combined with rising vacancies, and millions of pounds in debt, Songbird look destined for serious problems. A situation Songbird seems aware of, stating the current climate could leave them “unable to realize its assets and discharge its liabilities”. The future’s certainly looking dim for Songbird.