Ottawa-based e-commerce giant Shopify Inc. is to lease more than 254,000 square feet of downtown office space as it expands in Toronto’s fast-growing tech ecosystem.
“We’ve sort of kept a low profile here until now,” Shopify’s chief product officer Craig Miller said in an interview before the company unveiled the deal Friday.
The deal, with property managers Allied Properties Real Estate Investment Trust and landlord RioCan Real Estate Investment Trust, will see Shopify become an anchor tenant in The Well project, a 7.8-acre (3.2 hectare) mixed-use development on Front St. near Spadina Ave.
Miller said Shopify has been drawing on the city’s abundance of IT talent, quietly adding staff: 700 in operations that include product development and marketing, up from 400 a few months ago.
The company is outgrowing its current offices in downtown heritage buildings and has also announced plans to move into a new 178,000 square foot space on King St., with the new office set to open in early 2019. The Well investment will more than double Shopify’s footprint in the city.
Shopify’s total workforce has grown rapidly to more than 3,000 and Miller said the company is investing up to $500 million in its Toronto operations. He said Shopify expects to continue its hiring growth after 2022 when it will move into offices at The Well.
“We’re establishing a bigger footprint (in Canada’s largest city), but not just physically,” said Miller, referring to the company’s annual developer conference in Toronto, CEO Tobi Lutke’s featured speech at the citywide Elevate technology festival here this week and the company’s announcement of a partnership with York University to provide a unique computer science program.
Shopify’s lease announcement follows a flurry of new investments in Toronto by tech companies who are adding services and upping research spending. Among them is ride-sharing platform Uber, whose chief executive Dara Khosrowshahi lauded Canada’s “progressive immigration policies” and Toronto’s wealth of diverse tech talent when he announced a more than $200 million investment in a new engineering hub and the expansion of its self-driving vehicle test centre in the city.
The rapid growth of Shopify, whose platform helps merchants do business online and through retail point-of-sales technology, has been accompanied by a 500 per cent rise in share value since the company went public in 2015. That’s despite net losses and a slowing of revenue growth in recent quarters amid investments in staff and new platform features including systems that support mobile wallet payments.
Against this backdrop Shopify’s lofty market valuation has spurred criticism from an activist short-seller who last year questioned how many of the 600,000 businesses for which Shopify provides online stores are legitimate, claims Lutke calls “preposterous.”
The company also faces new competition especially from Amazon.com Inc., which is “creating products now that help small businesses market their products better, which is frankly the space we are in,” Lutke told BNN Bloomberg at the sidelines of the Elevate conference.
While Amazon is “the most powerful and agile and probably ambitious company in the world,” Lutke said, he’s confident in Shopify’s ability to adapt.
Miller emphasized Shopify’s partnership with Amazon, the leading shopping platform and said the company has created efficiencies and standards for e-commerce that have benefited all players.
Still, he said while Amazon offers a highly efficient online shopping system, “it’s not necessarily fun,” suggesting that Shopify is working on ways to make online shopping a more enjoyable experience.
Michael Lewis is a Toronto-based reporter covering business. Follow him on Twitter: @MLewisStar