Toronto retail insight

• About 1.6 million s.f. were absorbed in 2024, the highest since 2019, with greater net absorption in general retail and neighbourhood centres. Construction activity remains subdued, supporting a continued tight market.

• Available space remains at record lows. Asking rents continue to rise, but slower than the national average.

• About 3.7 million s.f. of leases were signed in 2024, in line with the five-year average leasing volume and showing signs of post-pandemic stabilization.

   

Demand for retail space strengthened in 2024, with most net absorption coming from general retail and neighbourhood centres. Demand continues to outpace supply, with available space declining in all property types except power centres. The current availability rate remains low at 2.0 percent, among the tightest rates in North America.

Asking rent growth has moderated since its peak in 2022 and is now below the pre-pandemic historical average. Leasing volume appears to have normalized. Supply increased slightly in 2024, but construction starts remain at historic lows.

Dining and apparel & accessories have dominated mall leasing, with Japanese coffee chain % Arabica in CF Eaton Centre and Moncler in Yorkdale Shopping Centre. Cineplex also opened a Playdium next to its theatres at the CF Fairview Mall. Outside malls, Asian grocer T&T and discount grocer No Frills are making inroads in downtown Toronto. Meanwhile, Nike, Burberry, Mango, and Smeg are the latest additions to Bloor Street.

Downtown Toronto continues to see more workers returning to the office, with office attendance spiking on Wednesday and dropping to its lowest level on Friday. Tourism spending reached pre-pandemic levels, with an increase in Canadian, U.S., and U.K. visitor spending. Pearson International Airport has returned to pre-pandemic traffic levels.

Toronto’s retail leasing market remains strong as available space becomes scarcer due to low construction levels, increases in real retail sales per capita and restaurant spending, and a gradual rise in downtown office attendance. In addition, Toronto is less dependent on U.S. exports than the national average. Despite headwinds such as slower population growth, low housing affordability, and potential U.S. tariffs, Toronto is expected to be one of the fastest-growing markets in Canada over the next five years.