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Market Report

Ottawa Retail Market Report

2Q 2023

Public Sector Presence Counters Economic Headwinds;
Supply Shortfall Tightens Vacancy

Resilient job market supports retail demand. Fueled by a rebound in consumer spending, Ottawa’s retail sector experienced a quick recovery in 2022. Elevated retail demand lifted absorption above the pace of deliveries for the second straight year since the onset of the health crisis, which kept the metro’s vacancy rate on a downward trajectory. The average asking rent also advanced 8 per cent — the highest rate of increase among major markets in Ontario. In 2023, as consumers are expected to tighten their budgets for an extended period in the face of higher interest expenses, Ottawa’s retail sales will soften. This will mostly be felt in the discretionary sector as consumers roll back spending on non-essential items. However, the metro’s high income per capita and public sector employment, which makes up nearly one-third of the metro’s total job market, will prove resilient in times of economic headwinds. This job market strength will provide a cushion for softening retail demand. Furthermore, the federal government’s requirement for its employees to return to the office for at least two days per week will lead to some improvement in retail sales and leasing activity in Downtown Ottawa.
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