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Shopify cutting Ottawa, Toronto offices amid work-from-home shift

Shopify’s Elgin Street headquarters in Ottawa. Shopify
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Shopify is planning to vacate its former Ottawa headquarters and one of its Toronto offices, and overhaul most of its other Canadian locations as part of a shift to working “digital by default.” 

The e-commerce giant sent its 5,000-plus staff home in mid-March amid the early North American onset of the COVID-19 pandemic. They’re now staying away from their offices until the end of the year, after which most employees will permanently work remotely.

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Talking Point

Ottawa-based Shopify will sublease its former main office in the capital as well as one of its Toronto offices, as the e-commerce giant shifts to a remote-first working model. The e-commerce giant is also remodelling spaces in Ottawa, Montreal and Waterloo as it goes “digital by default.”

Shopify will sublease its space in buildings on Ottawa’s Elgin Street and Toronto’s Spadina Avenue, spokesperson Rebecca Feigelsohn told The Logic. The firm unveiled its now-former headquarters in the capital in October 2014, initially taking six floors and 102,000 square feet at Performance Court, whose other tenants include brokerage CIBC Wood Gundy and consulting giant KPMG. The Ottawa Business Journal first reported Shopify’s plans to vacate the building.

The company isn’t leaving the capital, where it has more than 1,000 employees; its newer Laurier Avenue West office in the city “will be reimagined for our digital by default mindset,” said Feigelson, as will its locations in Waterloo and Montreal. In Toronto, the company will vacate 80 Spadina Ave., the first of its current spaces in the city, which opened in 2014 at 35,600 sq. ft. The King Street West office, into which it moved last year, will serve as its “hub in the Greater Toronto area,” and it still plans to add space in The Well development to the south. Across the country, Shopify will also take 70,000 sq. ft. in Vancouver’s Bentall Centre; it announced plans in January to hire 1,000 people in the city.

“The future of the office is to act as an on-ramp to the same digital workplace that you can access from your [work-from-home] setup,” CEO Tobi Lütke tweeted in May. The company signalled plans to reduce the physical space it leases in July. “We are exiting some of our secondary offices in major cities,” CFO Amy Shapero said on an earnings call, citing a US$31.6-million impairment charge. The company paid about US$18.3 million in lease expenses in the first half of the year, and has an average of nine years left on its agreements.

Shopify’s current space at Performance Court reportedly totals 170,000 square feet. “There aren’t really a large number of active private-sector tenants who have historically needed space in that amount,” said Shawn Hamilton, Ottawa managing partner at CBRE. “It’s been primarily [the] federal government, and Crown corporations.” A tenant trying to exit a space of that size would typically subdivide it to fit the needs of smaller firms looking to move in. “What is attractive here is [that] Shopify has made a significant investment in the space, not just architectural, not just cosmetic, but infrastructure-wise,” he said. 

Hamilton said there’s still demand in the capital from tech tenants who haven’t been able to expand downtown due to a vacant space. Gross rent for Class A offices in Ottawa currently run about $45.50 a square foot, according to CBRE’s estimates. While Shopify signed its original lease more than six years ago, at today’s price, the space it currently occupies would cost more than $7.5 million annually. Morguard, Performance Court’s owner, directed The Logic’s questions to the company.

Last month, BetaKit reported Shopify had laid off between 30 and 50 employees in its internal operations team as part of its shift. It isn’t the only tech firm planning more out-of-office work post-pandemic. Facebook CEO Mark Zuckerberg said half its staff could be remote within a decade, while Waterloo-based OpenText is closing half its spaces permanently. 

Performance Court, a few blocks down from Parliament and the National War Memorial, opened in June 2014 at a cost of $162 million. It also houses Beckta, the eponymous flagship of acclaimed restaurateur Stephen Beckta—located within Grant House, a 19th-century heritage building now incorporated into the office tower—and a location of local chain The SconeWitch. Shopify’s logo is on the building.

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Subleasing activity in Ottawa has increased during every recent economic downturn, according to Hamilton, who cited the 2008 financial crisis, the post-dot-com bubble and 9/11 period of the early 2000s, and the recession of the early 1990s. “Every time we’ve had space come on the market, it has been absorbed by a broader mix of tenancies,” he said, noting that each recovery has diversified the types of businesses operating downtown. 

Shopify is updating its offices in Waterloo and Montreal. This article has been updated.