Canadian Retail Market Overview
To date in 2024, some retail sectors have struggled throughout the Canadian retail market while others reported some growth, but the common underlying theme is the impact of inflation on consumer spending habits. This has been reflected in numerous ways including a shift away from grocery shopping at large chain grocery stores (i.e. Loblaws boycott) to smaller, local grocers, as well as, warehouse centres such as Costco.
While overall retail vacancy has continued to trend downwards since its most recent peak of 2.6% in Q3 2020, the four-quarter rolling average of net absorption as of mid-2024 remained below the four-year pre-pandemic average. This was primarily due to a result of the slower recovery of enclosed centres such as malls which fared the worst during the pandemic lockdowns. This asset type has also been one of the most impacted due to the softening in consumer spending on discretionary items such as fashion and accessories. Neighbourhood and strip centres on the other hand have had some benefit from this shift in consumer habits as retail sectors that have had the strongest growth to date in 2024 compared to the first half of 2023 include specialty food retailers and health and personal care—retailers that are more likely to be located in a neighbourhood/strip centre compared to an enclosed mall.
