Canada retail outlook - Mid-year 2020
The Canadian retail market softened, with availabilities rising and rents trending down
The Canadian retail market softened in the first half of 2020, with supply surpassing demand and availability rising. The availability rate advanced 50 basis points to 3.5 percent, due largely to move-outs in malls and general retail. Rent growth decelerated in the second quarter, showing signs of expected decline in the third quarter.
COVID-19 slowed the retail leasing market, lowering the number of deals. Net absorption and deliveries sharply declined. Move-ins barely outpaced move-outs.
Availability rose across major Canadian markets, less in Toronto and Ottawa and more in Edmonton. In Q2, average rents didn’t decline meaningfully, showing that markets were resistant to the increased availability. However, more flexible lease arrangements, including deferrals, abatements and rent as a percentage of sales, make rent a harder metric to track and compare.