The results of our Canada Retail Outlook Survey in late February were positive, with 60 percent of landlord respondents expecting an increase in retail leasing activity this year. The lack of new retail space has led to higher occupancy rates, and rapid population growth continues to bring new shoppers into stores.

In addition, many retail properties are being redeveloped to attract desirable tenants and to incorporate residential units, thus bringing shoppers closer to stores. However, new development initiatives are being carefully considered, with some landlords delaying potential new construction while construction costs and interest rates remain high. 

Retail stakeholders remain positive about 2024
JLL Canada Retail Outlook Survey (Feb-24) reveals industry optimism

Retail saved by pop. growth, offsetting per capita spending dip
Retail sales growth to mirror inflation this year

Following a phase of acceleration in 2022, overall asking rents for retail have seemingly now entered a phase of stabilization.

As premium spaces remain scarce, overall asking rents will continue to grow steadily, although at a slower pace. Besides rent, inflation and higher property taxes also continue to drive the increase in occupancy costs.

Demand for physical retail space remains steady and continues to outpace supply. However, demand varies across markets, with availability levels at a historic low.

Construction and completion activity remains limited, and the scarcity of prime space is noticeably impacting leasing volumes, particularly in Vancouver where availability is lowest across major markets.

As landlords continue to announce new projects to redevelop their malls, retailers might find themselves with increasingly limited options in the coming years if mall inventory continues to shrink. The housing crisis has accentuated the need to unlock land surrounding shopping centres for residential use, leading to the addition of street-level retail, public transit, community centres, and parks.