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Citigroup is on track to spend more than £1bn on the completion of its Canary Wharf tower, a sign of the huge costs involved in upgrading old skyscrapers as banks try to push their staff out of the office.
The US bank launched renovations on the 42-storey building at 25 Canada Square in 2022, when it was reported that the cost will be higher £100 million.
People close to the project said that figure was not realistic, however, and the estimated cost reached more than £1bn. Another person familiar with the project said the £100mn figure was incorrect and had not been publicly confirmed by Citi.
The cost of refurbishing 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 rent office space.
The price tag of the project, which will be completed by 2026, reflects a major investment by Citi in improving the quality of London's banking environment. fire unwilling employees I went back to the office.
But it also comes as Citi makes changes under chief executive Jane Fraser, who is under pressure to cut costs and boost the bank's profits.
The price also highlights the eye-watering costs of breathing life into aging buildings at a time when many towers, both at Canary Wharf and other centers around the world, are in need of major renovations.
Canary Wharf Group (CWG), the owner of the docklands, plans a perfectly prepared of the HSBC tower when the bank leaves in 2027, on behalf of the building's owner, the Qatar Investment Authority.
Clifford Chance's tower could be in line for refurbishment after the law firm's lease expires in 2028.
Citi's ambitious design for its project involves gutting the floors and adding new staircases to create tiered “villages” with different clusters.
The center of the castle will have a three-height “winter garden”, with several gardens supporting the entertainment area above. There will be a lot of work to update the mechanical systems and the facade.
Citi considered demolishing and rebuilding the tower before starting the project, but decided to go ahead with the renovation because using the existing frame was more sustainable, albeit more expensive.
The purchase of the tower designed by César Pelli, built for the bank by Canary Wharf, is one of the most expensive real estate sales in the UK. CWG has marked the value of its office portfolio by 26 percent since 2019, according to company reports.
Morgan Stanley is also about to start refurbishing its Canary Wharf building, but will receive £150mn in costs from CWG as part of a deal to extend its ten-year lease.
JPMorgan's tower, which it acquired after the collapse of Lehman Brothers, is also under renovation.
Citi declined to comment.