Canada Retail National Report

Sector fundamentals hold up despite headwinds. Sector fundamentals hold up despite headwinds. With the release of second quarter data, the impact of trade policy uncertainties and higher tariffs over the first half of the year has become more apparent. A mild decline in space demand reflects softening leasing activity, leading to higher vacancy rates as net absorption lagged completions. Absorption remained firmly in positive territory, however, beating initial fears of a recession-driven wave of store closures. While trade negotiations appear to be progressing more slowly than expected, Canada’s recent removal of retaliatory tariffs on USMCA-compliant U.S. imports offers some hope for easing tensions that could bolster confidence for both retailers and consumers. Faster retail sales growth may strengthen space demand in the second half of the year, ending 2025 with robust sector fundamentals.