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Shell abandons HQ to decade of development

Times Online

The company has agreed terms for a ten-year lease with Canary Wharf on 200,000 sq ft of Docklands offices

February 24, 2010

A view of the London Eye, located along the Thames River at County Hall, is seen across from the Shell Oil Centre building.

Carl Mortished, World Business Editor

Staff at Royal Dutch Shell will be moved next year from the Shell Centre at Waterloo to Canary Wharf as part of a huge redevelopment of the oil company’s historic London headquarters.

The company has agreed terms for a ten-year lease with Canary Wharf on 200,000 sq ft of Docklands offices at 40 Bank Street, a building close to the tower at One Canada Square.

About 2,000 employees are expected to make the move eastwards as Shell embarks on a huge property investment in Central London with the construction of new office buildings, a project that is expected to last a decade.

The search for alternative accommodation, conducted in secrecy by CB Richard Ellis, was given the code-name Project Thunderbird.

The decision to decant staff to Docklands marks the end of almost ten years of deliberation, false starts and setbacks by Shell as it tried to get a grip on its 50-year endowment of almost seven acres of valuable London real estate, including a 24-storey office tower on the Thames opposite the Palace of Westminster.

A spokeswoman for Shell confirmed yesterday that it was negotiating a deal on 200,000 sq ft at Bank Street. She said that the decade-long move by staff to Canary Wharf was “temporary” while the company redeveloped the low-rise buildings adjacent to the tower.

“Shell has no permanent plans to leave the tower building on the South Bank and will remain a major employer in the area with established connections to the local community,” the spokeswoman said.

Shell’s move to Docklands coincides with another round of cost-cutting by Peter Voser, the new chief executive. He has made his mark as a relentless pruner and trimmer of overheads since taking over from Jeroen van der Veer last year.

The recession took its toll on Shell’s profits in the fourth quarter of 2009 and Mr Voser’s response was to announce a drive for a further $1 billion (£650 million) in savings.

Periodic bouts of internal costcutting and the removal of layers of imperial bureaucracy led to the gradual attrition of Shell’s head office staff during the 1990s.

Shell Centre, next to the then neglected South Bank arts complex, became a windswept wasteland, the public spaces populated by skateboarders and the homeless. The staff bloodletting opened up opportunities for the company to exploit its huge land bank in the centre of London.

It first sold off the White House, one of the downstream low-rise buildings, to residential property developers. Then it drew up plans to convert the ground floor and subterranean levels of the Shell Centre Tower into a leisure and retail complex. The oil company joined forces with Lend Lease, the Australian developer, to bring the project, a 600,000 sq ft design by Arup, to fruition.

However, Shell’s real estate dreams fell foul of local politics in a London borough that had earned a reputation as a property developer’s graveyard.

Lambeth Council scuppered the project, complaining that it was too big and that Shell’s vast retail ambitions would have a negative effect on Lower Marsh Street, a small shopping alley behind Waterloo station.

Shell has yet to choose a new partner for its revived real estate dream and some in the property industry speculate that it might be tempted to sell the site if values recover strongly during the decade-long hiatus of development.

Shell Centre opened in 1963 after six years of construction and contained all the accoutrements of a more paternalistic era.

To accommodate the needs of 5,000 staff, the floors beneath the tower contained a travel agency, a bank, a hairdresser, restaurants and bars, a giant sports hall and gymnasium, a cinema and a near-Olympic size swimming pool.

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