350,000 square feet of office space in the Toronto Eaton Centre will be redeveloped into a 4-storey complex
Bank of Montreal will build a new “BMO Campus” in Sears Canada’s former Toronto head office adjoining the country’s most-visited shopping mall by 2021.
The bank will collaborate with Cadillac Fairview Corp. to redevelop 350,000 square feet of office space in the Toronto Eaton Centre into a 4-storey atrium, the companies said in a statement Thursday (March 1). Cadillac Fairview, the owner of the mall, will invest about $200 million to redevelop the space, CEO John Sullivan said in an interview.
BMO will further invest beyond that amount, Sullivan added. BMO didn’t disclose financial numbers.
BMO will move 3,500 employees to fill in the new offices, which will be located above a Nordstrom Inc. store, CEO Darryl White said.
“This urban campus is central to the business transformation that’s underway at BMO,” White told Bloomberg. “We’re positioning the bank to be at the forefront of change and lead the industry. This new workplace will be a centerpiece for how we drive value.”
The development of BMO’s new office is part of an ongoing drive across Canada to redevelop malls into hip urban oases including stores, offices, and homes. Cadillac Fairview, the real estate arm of the Ontario Teachers’ Pension Plan Board, has been actively churning its malls into mixed-use properties to capitalize on an office boom in Canada amid the changing face of retail.
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“We have a huge development pipeline and we view our malls as a huge landbank,” Sullivan said, adding that space will be used for offices, residential, retail, and even assisted-living homes. “It’ll be a real mix, which is where the world’s going. If you think about it, that’s what the Eaton Centre is. It’s the ultimate mixed use.”
Sullivan pointed to the demise of Sears, noting that by the time the beleaguered retailer went bankrupt, Cadillac Fairview only had eight stores left and the company already has plans to fill in six of those locations with retail and offices.
“We had Sears paying us $2 to $3 per square foot in rent, and we’ve signed leases with either new retail tenants or new office tenants for multiples of that,” he said. “It’s actually a win to get these spaces back and allow us to really maximize the use versus what Sears was doing.”
Neither BMO nor Cadillac disclosed the length of the lease, though Sullivan said it was beyond 10 years. “It’s a long term lease. Neither of us would make this kind of an investment without a long-term commitment.”
Canada’s fourth-biggest bank remains committed to maintaining its Toronto headquarters at First Canadian Place on King Street and has extended the lease there for another 15 years.
