Ottawa’s retail leasing market has softened
Market News
Ottawa demonstrated overall negative 45,000 s.f. net absorption in 2024, with Kanata leading in positive net absorption and Gatineau in negative. Construction activity remains subdued, which helps hold the market together.
The availability rate increased by 20 basis points to 2.6 percent, while asking rents continue to rise but at a slower pace than the national average.
About 800,000 s.f. of leases were signed in 2024, below the historical average leasing volume.
Move-outs outpaced move-ins in 2024, with most negative net absorption coming from strip and neighbourhood centres. Supply outpaced demand, with available space increasing in all property types except power centres. The current availability rate remains low at 2.6 percent, 20 basis points above 2023.
Asking rent growth has moderated since its peak in 2022 but remains higher than the pre-pandemic historical average. Leasing volume has dropped since 2023 to levels below the historical average. Supply increased slightly in 2024, but remains far lower than the historical average. Construction starts also remain at historic lows.
Apparel & accessories and dining have dominated mall leasing, with Victoria’s Secret, JD Sports, and Chick-fil-A opening in CF Rideau Centre. T&T Supermarkets and Sukoshi Mart made their way into Hazeldean Mall and Bayshore Shopping Centre. Altea Active is backfilling a former Canadian Tire space at 1660 Carling Avenue to open a massive 129,000 s.f. gym.
Downtown Ottawa foot traffic has increased since federal public servants returned to the office three days a week in September. Ontario is investing $20 million over three years to revitalize primarily the ByWard Market area. In addition, History Ottawa ─ Live Nation Canada’s new entertainment venue on Rideau Street ─ is set to open in early 2026.
Outlook
Interest in Ottawa’s retail leasing market has softened but remains robust due to low construction starts, rising real retail sales per capita, and a strong public administration sector. In addition, Ottawa is capitalizing on the burgeoning technology, telecommunications, and software companies that are springing up in Kanata, and has a lower dependence on U.S. exports than the national average. Despite slower population growth and lower productivity growth, Ottawa remains a competitive retail market.