Canada's fifth-largest bank is moving its headquarters south, anchoring two new towers that promise to redraw Toronto's skyline and extend the Bay Street financial corridor.
Canadian Imperial Bank of Commerce will be the lead tenant in a forthcoming development, known today as Bay Park Centre, to begin construction this spring. The connected towers will rise 49 floors each at 81 and 141 Bay Street, facing Union Station and the Air Canada Centre and straddling the train tracks that traverse the downtown core. One building is scheduled to be finished in 2020, the other in 2023. The 2.9 million-square-foot complex, to be developed and jointly managed by Ivanhoé Cambridge and privately owned U.S. developer Hines Interests LP, is among the more ambitious new projects to break ground in Toronto in recent years. Designed by architects WilkinsonEyre and Adamson Associates, it will draw together roughly 15,000 CIBC employees from many of the bank's 20-plus offices across Toronto, pushing a piece of the city's financial heart closer to the lakeshore.
CIBC plans to lease up to 1.75 million square feet of office space in the two-tower campus, starting from the ground floor. The bank doesn't expect the lease terms, or its investments in the development, to affect its financial targets.
But it does hope to drive a cultural shift by creating a more convenient and collaborative workspace while consolidating its scattered Toronto real estate portfolio.
"We tend to have to go outside of our existing premises to bring large amounts of our employees together, either through town halls, meetings or client events," said Stephen Forbes, CIBC's chief commercial officer, in an interview. "It allows us to bring people together in a very, very different way."
Terms of the lease agreement have not been disclosed, but Mr. Forbes added that "there's no impact in terms of our [earnings per share] projections."
Ivanhoé, a subsidiary of Quebec pension fund manager Caisse de dépôt et placement du Québec, also confirmed its purchase of 141 Bay St. from transit agency Metrolinx on Wednesday. Ivanhoé also plans to redevelop the adjacent GO bus terminal and extend the underground PATH network.
The developer is working to lease the remaining one-million-plus square feet of space, mainly on the upper floors. "It's basically a recognition that the centre of the gravitational pull in Toronto is shifting southwards," said Jonathan Pearce, Ivanhoé's senior vice-president in charge of office leasing for North America.
The plan to build the two skyscrapers has already taken a decade to reach this point. And as the company focused on getting the Bay Park Centre off the ground, "we've been underinvested in Toronto for a number of years," Mr. Pearce said. "We've probably passed up other opportunities."
CIBC will have exclusive naming rights for the new development, and plans to rebrand the centre in the coming months. Starting in 2020, all but about 6,000 of the bank's employees in the Greater Toronto Area will relocate to the buildings. But CIBC expects to keep a presence in the Commerce Court building it currently calls home, at Bay Street and King Street.
Mr. Forbes said the new office space will create efficiencies and help foster collaboration by bringing so many of the bank's employees together in the same space, which he calls "the most coveted" in the downtown core. Today, the bank has its Toronto-area office staff spread across more than 20 buildings across the city.
"You can't just give somebody a desk and a chair and say, 'here you go' any more," Mr. Pearce said. "Employers are really having to compete for talent."
Many of the leases to these properties are expiring in the coming years, making the timing right for the bank's move to Bay Park Centre, Mr. Forbes said. CIBC has not yet decided which offices it will be moving out of, but it will consolidate its Toronto real estate portfolio.
"I would say that we're going to reduce our existing building footprint, let's call it, roughly by half," he said. "But that's just a ballpark right now."