Citing ongoing construction delays, Apple may back out of its plans to lease a custom-built retail space in The One, a massive retail-condo project under construction in downtown Toronto. The move would leave the luxury tower located at One Bloor Street W. without a retail anchor and an extra 15,000 square feet of retail space.
Mizrahi Developments president Sam Mizrahi, whose company is leading the development, said all project timelines have been met. Mizrahi appealed to the Ontario Superior Court on Oct. 5, 2021, to secure a court order to block Apple from terminating the lease.
So, what is the dispute between the American tech giant and the Toronto luxury real estate developer all about?
Why would Apple want to pull out of The One?
The Globe and Mail reported on Feb. 13 that Apple informed Mizrahi it may exercise an option in the lease that supposedly allows the American tech company to exit without financial penalties if the developer does not meet certain projects deadlines.
Craig Patterson, founder and co-editor-in-chief of online retail publication Retail-Insider.com, said in a phone interview that Apple’s move may just be a negotiation tactic.
“This is not the first time that apple has threatened to pull out due to delay,” he said.
Why did Mizrahi go to court?
Apple stores are magnets for consumers and the ground floor Toronto flagship store would likely attract huge crowds to the building and the surrounding neighbourhood.
Mizrahi said in the court submission that if Apple pulls out The One would “suffer irreparable harm from losing a world-class tenant intended to be an anchor tenant for a world-class property, which is a loss that cannot be compensated in damages.”
But Patterson said Mizrahi may have another motive.
“It is a vanity project for Sam, his crown jewel. He will never come close to developing as large a project, affecting his self-identity, self-esteem, impacting his personality,” he said.
What happens to The One if Apple pulls out?
“It would throw a monkey wrench in the project” as London-based architects Foster + Partners specifically designed the space for the Apple store, Patterson said.
However international chain stores can afford the rent. Uniqlo, Nike, Under Armour, even a “massive Lego store” are all possible candidates for the space.
“Big multi-national retailers, but not mom and pop operations,” Patterson said.
Apple’s move may disappoint the building’s neighbouring tenants. But Paterson said not a lot of leases were signed because they knew Apple would be a tenant.
“The Hyatt hotel set up in The One because of the building and the location, not because of the Apple store.”
Commercial real estate developer and chief executive officer of Allied REIT Michael Emory said the location is prime real estate and Mizrahi would be able to find a replacement.
“It’s almost the epicentre of Toronto. It’s a fabulous corner, just outstanding,” Emory told the Globe on Feb. 13.
How will local area businesses be affected?
Briar de Lange, executive director of the Bloor-Yorkville BIA, said in a phone interview that one way or another nothing changes the fact that Bloor Street is “Toronto’s high street.”
“If a deal falls through it will not negatively impact pending deals. Other landlords are still doing deals,” she said.
“The street has demand tract.”
De Lange said the space at The One is attractive to other retailers. The column free design of the store will appeal to many brand-name international retailers since you don’t have to build around the columns.
“The area may benefit from another retailer taking Apple’s place.”
Where do things now stand now between Apple and Mirhazi?
The court has not issued a judgment and it is unknown whether the parties are near resolving the case out of court.