Sidewalk estimated that the development would create 93,000 jobs and $14.2bn in annual gross domestic product by 2040 © Heatherwick Studios/Sidewalk Labs

Alphabet subsidiary Sidewalk Labs has walked away from its almost three-year effort to develop a high-tech neighbourhood in Toronto, blaming the economic fallout from Covid-19. 

The New York-based sister company to Google has spent at least $50m developing a 1,500-page master plan for a “smart city” on the Toronto waterfront that would test technical innovations from moving pavements to smart rubbish bins.

But the proposed $3.9bn development has been dogged by criticism of its approach to data privacy and sparked disputes with city officials over the amount of land involved. 

Dan Doctoroff, the Sidewalk chief executive, blamed the end of the project on “unprecedented economic uncertainty” hitting the world economy and the Toronto real estate market. Property sales in the city fell 69 per cent in early April from the previous year, according to the Toronto Regional Real Estate Board.

“It has become too difficult to make the 12-acre project financially viable without sacrificing core parts of the plan we had developed”, Mr Doctoroff said in a statement. Sidewalk said it will continue its other innovation projects, but the company now lacks a flagship testing ground. 

Sidewalk’s departure is also a blow to Toronto, which had hoped to attract a new 500,000 square foot Google headquarters. Sidewalk estimated the whole development would create 93,000 jobs and $14.2bn in annual gross domestic product by 2040. Prime Minister Justin Trudeau and then-Alphabet chairman Eric Schmidt hailed the smart city when it was first announced in 2017. 

Toronto mayor John Tory said he regretted Sidewalk’s decision but would push to find a new partner to develop the lands into a “neighbourhood focused on innovation” that would be the “envy of cities around the world”.

“I am extremely confident there are partners eager to undertake this endeavour,” the mayor said. 

The activist group #BlockSidewalk said local opposition had hastened the Google-affiliate’s departure by resisting Sidewalk’s request for more land. Sidewalk agreed with a city agency in October to reduce its ambitions from a 190-acre development to the 12-acre site originally offered for the project. 

“This has been coming for a while”, said #BlockSidewalk organiser Julie Beddoes in a statement. “We knew all along that Sidewalk can’t realise its tech dreams on 12 acres alone.”

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