Toronto Urban Retail
Contributing to Toronto's stronger urban retail are increased tourism, the return of office workers, and a renewed interest in in-store shopping
- Heli Brecailo
Q4 2022 average asking rent across Toronto’s 11 retail corridors dipped by 0.9% to $91.23 per square foot
The number of direct ground-floor availabilities totals 167, or 12.79% of the corridors
Ossington Avenue, Leslieville, and Yonge & Eglinton are Toronto’s tightest corridors
Toronto Market Overview
Toronto’s retail industry has shown remarkable resilience in the face of pandemic-related challenges. Contributing to a stronger retail landscape are the resurgence of Canadian tourism and the gradual return of office workers. During the holiday season, shoppers also demonstrated a renewed interest in in-store shopping, and significant pent-up demand for experiences fueled restaurant sales.
However, the retail leasing market in downtown Toronto experienced a slight pullback in Q4 due to negative economic news such as inflation, interest-rate hikes, and declining home values. Despite these setbacks, there are still reasons to be optimistic. Toronto’s tight labour market – which accounted for nearly 20% of national employment growth in January – is a positive sign, suggesting that shoppers continue to have spending power.
Office occupancy rates in downtown Toronto reached 42% in January 2023, a significant increase from less than 10% in January 2022. The rates peak at 57% on Wednesdays and dip to 29% on Mondays. This growth trend is expected to continue as more workers return to their offices, signaling the revitalization of downtown’s business and retail districts.
In-person holiday shopping in Toronto saw a significant increase in foot traffic, with major commercial downtown areas surpassing pre-pandemic levels. A similar trend was observed in the dining sector as shoppers looked to celebrate the holidays outside their homes. These positive indicators suggest a strong demand for in-person experiences.
Businesses in downtown Toronto are expanding in highly trafficked areas to capitalize on demand for in-person experiences. This spring, Toronto will see the opening of the NBA Courtside Restaurant, the city’s first NBA-themed restaurant, located just steps from Scotiabank Arena. Additionally, Modern Golf will open on the PATH level of First Canadian Place. These businesses’ strategic expansion plans cater to the growing demand for unique experiences, positioning them for success in the city’s rebounding retail and hospitality sectors.
In total, 32 new leases were transacted in Q4 2022, totaling more than 83,000 square feet. Ossington Avenue (Queen to Dundas) and Yonge Street (Gerrard to Bloor) experienced the most leasing activity with five new leases signed in each submarket.
The largest lease was signed by Saint Laurent for 10,400 square feet at 110 Bloor Street West. Additionally, Value Village Boutique leased 9,362 square feet at 2637 Yonge Street and Healthy Planet secured over 6,000 square feet at 322 Yonge Street.
Yonge Street (Eglinton to Blythwood) recorded the highest leasing velocity among all neighbourhoods, with over 17,000 square feet leased across three transactions.
Food & beverage (F&B) was the leading category in terms of number of new retail transactions (five), while Unisex Apparel led the charge with nearly 13,000 square feet of new deals. Notable transactions include Vancouver-based Hello Nori securing 2,576 square feet at 650 King Street West and Montreal-based One-of-a-Kind leasing 2,894 square feet at 333 Queen Street West.
The average availability rate for the 11 retail corridors increased 1.8 percentage points to 12.79%. Bloor Street West from Yonge Street to Avenue Road had the highest percentage of available retail space (22.73%), while Ossington Avenue, Leslieville, and Yonge & Eglinton had the lowest (4-5%).
The number of available storefronts increased from 145 in Q3 to 167 in Q4. The largest contributor to the increase was Yonge Street (Gerrard to Bloor) with an additional 28 availabilities.
Average Asking Rent
The average asking rent for Toronto’s 11 retail corridors decreased by 0.9% to $91.23 per square foot. The largest contributor to the decline was Bloor Street, down 8.4%. Nevertheless, Bloor Street still leads at $228.85 per square foot, followed by Yonge Street (Queen to Gerrard) at $118.33 and Yorkville Avenue (Yonge to Avenue) at $108.57.
While the upcoming Ontario Line will benefit downtown Toronto, local businesses have expressed concerns about disruption caused by partial street closures during construction. The new subway stations are expected to reduce congestion and commute times downtown, providing long-term benefits to the city’s transportation and business sectors.
Union Park is a highly anticipated urban development project that is currently in the design phase and under review by the City of Toronto. With an estimated value of $3.5 billion, the project is set to include 4.3 million square feet of office, residential, and retail space, and will be developed by Oxford Properties. The project is expected to create a new landmark in the city, connecting to the northern part of the CN Tower.