SW Ontario Retail Market Report

Near-term challenges weigh on space demand. Southwestern Ontario has benefited from a post-pandemic population surge, fuelled by an influx of international students, foreign workers and those seeking a lower cost of living. The resulting growth in the consumer base and foot traffic boosted retail space demand over the past five years. Combined with limited supply growth, the vacancy rate tightened sharply from 2.4 per cent pre-pandemic to 1.2 per cent last year. Now, this demographic tailwind is reversing, as Canada’s immigration overhaul has slowed the inflow of immigrants. The shift has raised concerns for retailers and will likely temper the pace of storefront expansion going forward. Additionally, given the metro’s deep integration into the North American supply chain, trade frictions with the U.S. have already weighed on space demand this year. A prolonged period of trade policy uncertainty would keep leasing activity under pressure.