Canadian retail market tightens further
Key trends
Spending recovery bounded by tariff risks: Retail sales per capita are expected to rise in 2025 for the first time in several years following stronger holiday sales in 2024. However, risks posed by U.S. tariffs on Canadian goods and retaliatory Canadian tariffs could lead to increased inflation, job loss, and economic uncertainty, curbing spending growth.
Tight retail market conditions: The retail real estate market is further tightening, with a low availability rate of 2.2 percent and increased net absorption. This trend favours landlords but presents challenges for retailers seeking new space, especially in major markets like Vancouver and Toronto.
Construction at record lows: Rising asking rents and lower interest rates have not yet spurred a construction surge. The pipeline remains constrained, with most under-construction projects coming from redevelopments in Vancouver and new construction in Calgary.
Food services dominates store openings: Food services followed by apparel & accessories, grocery, and beauty remain the most active sectors for store openings and site searches. Major malls are seeing a similar trend.