A mixed-use development long in the works for a block of King Street East is now proposing a significant hotel component, the direct result of faltering demand for office space in the city.

Plans to redevelop the site at 34-50 King Street and 2 Toronto Street with a 33-storey tower have been in the works since 2016, though developer Larco Investments has stalled on forward momentum since a version of the plan, including condos and office replacement space, had its zoning approved by a provincial tribunal in 2022.

With the office market in Toronto in turmoil amid soaring vacancy rates, the rise of remote work, and changes to City policy on residential-to-office conversions, the developer has adjusted plans, and is now seeking approvals to switch the approved replacement of existing office space on site with a new hotel.

In documents filed with the City this month, the project team quotes a 2024 report prepared by Parcel Economics Inc. and Gladki Planning Associates on behalf of the City of Toronto, which found that local office availability in the core sits at 14 per cent.

Due to these conditions, the team states that "While the wwner is committed to realizing the redevelopment — and the resulting benefits of heritage retention, increased housing options, and new commercial space — adaptations to the non-residential component are necessary to ensure the project's viability."

Those changes come in the form of a new hotel and supporting commercial uses in place of the office space that was previously approved for the first nine levels of the building.

A total of 142 new hotel suites are proposed within 8,836 square metres of the building, along with 1,317 square metres of complementary commercial/retail space at the base of the tower.

Plans explain that the existing heritage building at 2 Toronto Street will be integrated as part of the proposed hotel, with levels two and three housing a commercial food and beverage space, and hotel conference room facilities on levels four and five.

Along with the hotel units, the plan retains the earlier version's residential component on levels 11-33, consisting of 219 condominium units.

Aside from internal changes, the proposed design from architects—Alliance remains unchanged from a previous 2021 revision, including the height and massing.

Larco's hotel division, Larco Hospitality, has been associated with hotel brands, including Sheraton, Marriott, Hilton, Fairmont, and W Hotels.

While no additional details are currently available about the hotel operator, it is fair to assume that the new accommodations would directly compete with the Omni King Edward Hotel located directly across the street to the south.

The switch from office space to a planned hospitality component reflects the downtown core's gradual shift over the years from a primarily central business district to a mixed-use place to work, play and visit.