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Market Report

Toronto Retail Market Report

3Q 2022

Robust Recovery Led by a Strong Economy;
Challenges Expected in the Second Half of the Year

Strong rebound in retail demand during the first half of year. Retail activity was elevated in the first half of the year, driven by a robust labour market and further relaxation of COVID-related restrictions. Foot traffic and retail sales, initially impeded by the omicron variant in January, quickly rebounded. Retail sales in Toronto swelled by over 30 per cent year-over-year in the second quarter of 2022, making up 17 per cent of total national sales. This strong momentum helped compress the retail vacancy rate to 1.7 per cent as of the end of June amid strong net absorption of over 800,000 square feet, a level not seen since early 2019. However, returning to the workplace has stalled since the initial improvement seen in the first quarter, as a number of firms adopted longer-term hybrid and remote operations and downsized their physical office footprints. This lack of progress slowed a full return to normal, which has caused lingering challenges for retailers in the downtown core.
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