Toronto’s PATH underground mall stores worried about hybrid work in towers above


TORONTO, Sept. 29 (Reuters) – Business slowly begins to creep back into Toronto’s PATH mall’s Second Cup coffeehouse franchise, as workers return to major downtown office buildings above the Most great underground retail hub of the world.

The pandemic has cut sales by 80%, said Bryan Archee, owner of the Second Cup site for 11 years. The return of office workers to the towers above offers a silver lining for his business and the others who depend on it. Still, Archee is troubled by reports that many employers will adopt a hybrid work model.

“The hybrid will greatly affect our business,” he told Reuters. “Our average check is not high, so we need the volume. If we don’t have that volume, we won’t survive.”

PATH is a collection of some 1,200 restaurants and shops spread over 30 kilometers (18.6 miles) below Toronto’s main financial district. The City of Toronto says PATH connects office towers owned by about 35 business owners.

After one of the world’s longest continuous closings ends, hundreds of stores remain closed or empty in PATH, which was bustling with life before the pandemic with 200,000 office workers using it every day of the week. The hubbub of crowds of office workers, who filled its hallways during breaks or after work, has been replaced by an eerie calm.

In contrast, shoppers returned much faster to street-facing retailers and the nearby Eaton Center mall, a popular tourist and shopping destination.

Foot traffic is critical to the financial survival of the Archee store and many other PATH businesses. They are bracing for an uncertain future even after the pandemic, with many companies predicting employees to continue working remotely for part of the week.

Retailers’ PATH stores, including fashion brand Maska Mode and gourmet fast food chain Mad Radish, for example, remain closed, but their stores in other malls and on the streets remain open.

CHANGE THE MIX OF ACTIVITIES

Small businesses that have no or few locations elsewhere will be particularly affected, said Karl Littler, senior vice president of public affairs at the Retail Council of Canada.

“The PATH is big, complex, but it’s not a destination in and of itself,” said Tim Sanderson, National Retail Manager, JLL Canada. “And it’s still focused on fashion and food, the two categories that have been significantly affected by what’s going on. We’re going to continue to see vacancies there.”

Leases can allow tenants to break contracts if a certain level of occupancy is not maintained, which could further increase vacancy levels, said Craig Patterson, retail consultant and editor of Retail Insider.

Without the thousands of office workers who roam the PATH daily, landlords might be looking for more resilient tenants. Clothing stores and other traditional businesses that are leaving could be replaced by educational establishments, clinics, even technology spaces and libraries or other service offerings that are in themselves destinations for residents of the center. -City of Toronto, said Bradley Jones, head of retail at Oxford Properties Group. Oxford Properties has office towers and sections of PATH below.

With multiple owners owning sections of the PATH, complete statistics are not available. But some tenants who went bankrupt were replaced by others on short-term leases or pop-up stores.

Many, like Archee’s coffee, survived on government subsidies and leniency from owners during the closures.

“The question is, when you take these bandages off, what’s going to happen?” said Frank Magliocco, Real Estate Leader at PwC Canada. “Do they have enough to get back on their feet?” “

Offices are now about 15% occupied and are expected to reach 50% by the end of this year, which will help revive some PATH businesses, Jones said.

But “there is no doubt that these PATH and metro facilities have been hit the hardest,” he said. “And they will take longer to recover.”

Reporting by Nichola Saminather Editing by Denny Thomas and David Gregorio

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