E-commerce giant Shopify has reportedly listed its shiny new downtown Toronto office space for sublease.
In December, Shopify confirmed that it would not be occupying the multi-storey office space it had leased at The Well complex, despite having, in 2018, signed a 15-year lease that began in 2022. The Ottawa-based company originally signed on for 254,000 sq. ft of space, with the option to expand to 434,000 sq. ft.
According to The Globe and Mail, Shopify has now listed for sublease 348,103 sq. ft of office space, spread across seven floors of The Well's gargantuan office-retail-residential community, located on the north-west corner of Spadina Avenue and Front Street West.
Shopify plans to keep its current office space at the nearby King Portland Centre and will centralize Toronto operations there.
Neither Shopify nor The Well's owners, RioCan REIT and Allied Properties REIT, responded to STOREYS' requests for comment by the time of publication.
The news comes as office vacancy in downtown Toronto continues to rise, hitting 13.6% during the final quarter of 2022, per CBRE's Q4 Office Figures report. This uptick, the report says, came amidst the delivery of 2.4M sq. ft of new supply in 2022.
"Much of the vacancy rise in Canada’s largest city is attributed to major tenant relocations to new developments, leaving behind dated product – the proverbial 'flight to quality,'" CBRE notes in a press release.
Seeming to nail the Shopify situation on the head, CBRE goes on to explain how the sublease space is also rising in Toronto. "While most units are smaller than 10,000 sq. ft. and are from groups that have elected to work from home, Toronto is seeing an increased number of larger subleases from corporate occupiers curbing their growth plans," CBRE says.
Office vacancy rates are even higher in Toronto's suburban areas, at 19.3%, bumping up the city's overall vacancy rate to 16.2%. Although the numbers may seem large, they are far from the highest in Canada and are actually below the national average of 17.1%. Edmonton office space clocks in at 22.2% vacant, meanwhile Calgary has a staggering 30% vacancy rate. Of the 10 major markets observed for the report, Vancouver had the lowest vacancy rate of just 7.8%.
Looking forward, CBRE Canada Chairman Paul Morassutti says “the office sector will face a bumpy 2023 as it contends with a potential recession, a re-structuring of the tech sector and continued uncertainty around the impact of hybrid work patterns."
