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Shopify Inc. SHOP-T put its massive office space in downtown Toronto on the sublet market on Tuesday, flooding the country’s largest business hub with even more unused space.

The e-commerce company’s lease is for 348,103 square feet, spanning seven floors of a newly built office, residential and retail complex, according to documents marketing the new space.

Ottawa-based Shopify had been expected to be the major tenant in The Well complex owned by real estate investment trusts Allied Properties and RioCan. But late last year, Shopify disclosed that it would no longer make the move to the new location.

It marks the latest setback for Toronto’s office market, where vacancies have soared as businesses try to unload unneeded space and scores of new office skyscrapers are being completed. The city and its businesses have struggled to bring its staff back to the office after workers spent the first two years of the pandemic working from home. The downtown core is sparsely populated most of the week, hurting the retailers that exist to service the office crowd.

As of the end of last year, the office vacancy rate in downtown last year was 16 per cent, according to data from commercial real estate firm Altus Group. That is four times higher than in prepandemic days and tops the level seen during the Great Recession in 2008-09.

Other businesses that are trying to get rid of large chunks of space include Canadian Imperial Bank of Commerce, which wants to sublet nearly 400,000 square feet across five buildings in the financial district.

Toronto’s office vacancy rate had always been expected to rise over the past year because of the new developments, but not to this level. Landlords were betting the vacancies would eventually be filled by other businesses trying to set up shop in Toronto.

But today, companies are dealing with a work force that does not want to come into the office five days a week. Many businesses are allowing their employees to spend part of the workweek at home.

As of mid-December, the percentage of employees in the office on any given day averaged 38 per cent of prepandemic occupancy levels, according to data from consulting firm Strategic Regional Research Alliance. The consulting firm found that the busiest day of the week was on Wednesday, when volume was 52 per cent of prepandemic occupancy, and the slowest day was Monday at 24 per cent.

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