SW Ontario Retail Market Report

Vacancy to tick up slightly as demand tailwinds wane. Strong population growth, remote work arrangements and the suburban nature made Southwestern Ontario the tightest retail market in 2022, with the lowest vacancy rate in Canada. Compared to other metros, Southwestern Ontario experienced a more balanced population growth. Immigration, domestic in-migration, and foreign workers and students each contributed to roughly one-third of the metro’s resident gain. This demographic strength solidified the region’s consumer base, motivating many operators to increase density and diversify existing retail offerings. The lagging progress of return to office also helped retain retail demand spilled over from the neighbouring GTA during the pandemic. This was particularly evident in the metro’s essential segment, which was a top-performing sector given the region’s suburban nature. In 2023, near-term economic headwinds may cause consumer spending to soften, and a diminishing trend of remote work will cap resident gains from other parts of Ontario. These factors will likely introduce a temporary softening in retail demand and, in turn, leasing activity, which will exert upward pressure on the vacancy rate.