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Pedestrians walk in front of The One, a skyscraper currently under construction in downtown Toronto, Feb. 13.Eduardo Lima/The Globe and Mail

Technology giant Apple Inc. AAPL-Q is suing Sam Mizrahi’s company to terminate its lease at the developer’s long-planned 85-storey skyscraper in downtown Toronto, saying it is “disappointed” in the company and is owed millions of dollars in damages for missed deadlines.

The skyscraper at Yonge and Bloor streets, called The One, is currently under construction and is expected to be the tallest commercial condo building in Canada. It was intended to include Apple’s flagship Toronto store on the ground floor, which would have been a significant draw to the building and surrounding area.

But six years after Apple and Mizrahi Developments signed their first lease agreement, the future of the store is in doubt, with the two parties fighting over the project’s development. When promoting the project, Mr. Mizrahi has touted the significance of his company inking a lease with a “global flagship anchor tenant.”

But with that tenant now getting cold feet, it is unclear what effect this potential vacancy might have – if any – on the future of The One.

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“Apple is profoundly disappointed with Mizrahi,” Apple Canada Inc. said in application, filed on Jan. 28 in Ontario’s Superior Court of Justice.

“Apple regrets that Mizrahi’s failures have resulted in Apple having to take the step of ending its relationship with Mizrahi,” Apple said in the filing.

According to the lease agreement, Apple has an option to leave without penalties if Mizrahi misses certain deadlines.

But Mizrahi said it has not missed deadlines and Apple does not have the option to get out of the lease, according to an earlier application the developer filed in court in October, 2021.

The legal application was made in an effort to stop the retailer from leaving. Mizrahi has said it would “suffer irreparable harm from losing a world-class tenant that was intended to be an anchor tenant for a world-class property, which is a loss that cannot be compensated in damages.”

In Apple’s recent application, which is in effect a response to Mizrahi’s lawsuit, the retailer said it had been “looking forward to opening this new store for its customers.” Currently, the tech giant’s main store in downtown Toronto is in the Eaton Centre shopping mall and is not a stand-alone store.

Apple claims it is entitled to $6.9-million in delay damages. It is seeking a court order declaring that Mizrahi missed crucial deadlines and that Apple is allowed to terminate the lease. It is also seeking an additional estimated £18,600 it says it is owed in connection with a tri-party agreement between Apple, Mizrahi and the building’s architect, London-based Foster + Partners.

A high-profile British firm, Foster + Partners has worked on Apple’s top stores in New York, Los Angeles, Milan and other major global cities. Foster + Partners did not respond to a request for comment. The architect’s website lists The One as one of its projects under construction and calls it a “heroic endeavour” to create a tower of this size.

The original lease agreement between Apple and Mizrahi is dated March 23, 2016. It was amended twice to push out the maximum final delivery date from Nov. 30, 2019, to Oct. 31, 2021, according to both parties’ court documents.

Apple lists 26 items it alleges Mizrahi did not complete by the Halloween deadline. They include incomplete common areas and other work that allegedly prevented Apple’s occupancy.

At The One early this week, workers had already erected five storeys above ground. The window spaces for the ground floor retail spaces – which feature extra-high ceilings – are covered up in anticipation of future tenants.

Mizrahi had blamed the delays on events that were out of its control, such as a provincewide plumber and pipefitter strike in 2019, and COVID-19, which has delayed construction of many projects across the country.

Apple disagreed and said Mizrahi’s delays were not the result of the pandemic. “They were the result of Mizrahi’s inability to manage the project,” Apple said in its application. Apple has also asked the court to hear its application and Mizrahi’s at the same time.

A spokesman for Apple Canada declined to comment.

Mizrahi did not respond to a request for comment.

If Apple leaves, Mizrahi will have to find a new retailer to fill the space. A leading commercial real estate developer has said the Yonge and Bloor area is prime real estate and Mizrahi will be able to find a replacement.

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Follow Greg McArthur on Twitter: @McarthurGregOpens in a new window
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