New Complex Luring Away London Financial District Tenants : Real estate: Canary Wharf, which once appeared a disaster, offers facilities that can’t be matched in ‘the City,’ and is home to some big banks.

London’s venerable financial district has survived all manner of attacks over the centuries, from plagues and fires to the bombs of World War II.

Now the twisting streets and stately buildings known as “the City” face a more subtle threat: defectors.

The Canary Wharf complex in Docklands east of the heart of London, which once looked like Britain’s biggest real estate disaster, is luring away some of the City’s top residents with a promise of wide open office spaces.

Many buildings in the City are not suitable for the vast dealing floors and computer equipment that banks need. Planning restrictions are severe. So banks have been leaving.

If a number of German banks eager to make their mark in London decide to forsake tradition for a riverside view, the center of influence in the City could shift perceptibly eastward.

“It’s something we cannot allow to continue without being aware of the consequences,” said Michael Cassidy, head of the policy committee of the Corporation of London, the City’s governing authority.

For bankers who thrive on the “Square Mile’s” clubby yet bustling atmosphere, Cassidy paints a gloomy picture if this trend goes unchecked.

The troubles facing the City are not unlike those affecting New York’s Wall Street financial district, where companies with tens of thousands of employees have moved either uptown, to nearby boroughs or to New Jersey in search of newer, less expensive or larger quarters.

Sir Peter Levene, chairman of Canary Wharf, said this could not be repeated in London. “There is no way that the center of the financial world will move out of the Square Mile. It will always be there, clustered around the Bank of England.”

Real estate agents said that was exactly where many office buildings were vacant. “You see so many empty old buildings in the City core,” said Mark Slim of Jones Lang Wootton.

“The planning restrictions make it difficult with those kinds of buildings to produce the kind of space that the modern City occupier requires.”

The latest coup for Canary Wharf was the signing of BZW, the investment banking arm of one of Britain’s top banks, Barclays. Last month BZW said it had leased more than half a million square feet at Canary Wharf, which will become its global headquarters.

Looming over the Thames in the Docklands area, the huge complex is an impressive sight, dominated by an 800-foot tower.

Only three years ago it was near collapse after its owner, Olympia & York, went into bankruptcy.

Britain’s longest recession since World War II had sent commercial real estate values into a dive and, with the British government dragging its heels on infrastructure projects such as transportation links, tenants were scarce.

Things changed. Britain came out of recession, a 1.1-billion-British-pound ($1.76-billion) financial rescue package was arranged for the project, transportation links to the area were approved and tenants were soon ready to sign.

Levene said there had been too wide a gap between the public perception of the complex and its reality. People believed it was hard to get to and there were no shops or restaurants, and the future for the Docklands looked grim.

Now about three-quarters of Canary Wharf has been rented and Levene said he would be disappointed if the remaining space was not taken up within a few years. “Over a period of time, the perception has caught up with the reality,” he said.

But should the City really be nervous about Canary Wharf?

“This is being taken a bit out of context,” Levene said. “There are 84 million square feet of office space in the city of London. We have just over 4 million. I think that gives you a sense of proportion.”

Cassidy said the Canary Wharf chairman was being “disingenuous” with his figures. “We’re talking about the marginal demand for office space and that is all-important. In other words, who gets the next big player?”

Institutions believed to be considering setting up in Canary Wharf include the London International Financial Futures and Options Exchange and Germany’s biggest bank, Deutsche Bank. Banks such as Bear Stearns, Credit Suisse and Morgan Stanley are there already.