Colliers’ Global Retail Trends & Forecast Report 2025 says Canadian retail faced an unusual number of headwinds in 2025 but remains surprisingly resilient so far.
“The unprecedented trade war with the U.S., starting in January, sowed chaos across business and consumer confidence. As the year draws to a close, the impacts are largely confined to certain industrial sectors such as resources and agriculture. Canada recently removed counter tariffs on U.S. goods, and the expected surge in inflation has yet to materialize,with CPI remaining below 2% in Canada,” said the report.
“While the trade war was a negative, the silver lining for retail has been a huge investor appetite for “essential” retail as a defensive asset during a time of uncertainty. The tailwind for retail post-pandemic has included tremendous population growth in Canada, which has been curtailed with a new federal government. Retail spending remains strong, and combined with a rising Canadian dollar and continued expansion in sectors such as food and beverage (F&B), the outlook for retail leasing, spending and investment remains positive in 2025.”
The report referenced the demise of the Bay, Canada’s oldest retailer and one of the oldest in the world.
“Long on the “deathwatch,” the Hudson’s Bay Company was a fixture of large-format retail in Canada for generations. The sunset of the Bay illustrates that large-format retail is defunct in Canada. Recent exits have included Nordstrom (2023), Sears (2018), Target (2015) and Zellers (2013). Local player La Maison Simon’s has expanded, but very gradually, and nowhere near the scale of other entrants, with fewer than 20 stores across the country,” said Colliers.
“Given the average size of Hudson’s Bay stores was over 100,000 square feet, and sometimes over 500,000 in larger markets, these spaces will likely be converted and subdivided to accommodate emerging concepts, such as indoor recreation or food halls. The challenge of filling the Bay leases will be significant, as the company operated 80 stores nationally, many of them in leading retail outlets. The Bay’s affiliated brands, Saks Fifth Avenue and Saks Off Fifth, will also close, adding another 16 stores to the lot. That said, the Bay’s exit may create new opportunities for landlords.
“Long known for restrictive lease terms that limited redevelopment, the retailer often constrained changes to layout, parking and mixed-use integration. Without those limitations, landlords may find it easier to reconfigure assets, particularly as many suburban retail centres look to incorporate multifamily or hospitality components.”
As the closest country geographically and economically to the U.S., the threat of tariffs and a trade war had a considerable impact.
Canada is an economy heavily focused on exports, with the majority going to the U.S. The effect on sentiment, consumer confidence and expansion plans for Canadian retailers and consumers was immediate and immensely negative.
“However, eight months later, the impacts appear more muted than initially feared. The existence of USMCA (formerly NAFTA) ensures that the vast majority of exports are exempt from tariffs. Moreover, the feared spike in inflation has yet to materialise; CPI remains below 2% in Canada, as lower gas prices and a weaker job market have introduced some slack into spending and demand. Every dark cloud has a silver lining, though, and the appetite for Made-In-Canada retail has never been higher,” explained Colliers.
“This extends to almost every sector, including groceries, alcohol, clothing, footwear, jewellery, automotive and technology. Virtually all retailers (even U.S.-based ones) now loudly feature Canadian products, and Canadian brands in every sector have capitalised on the moment to promote their wares against U.S. competitors. Some jurisdictions have entirely barred imports of U.S. products such as wine, creating opportunities for local players. Travel to the U.S. has cratered, as seen in the data below and has created opportunities for hospitality, tourism and retail in Canada. Additionally, European travellers have opted for Canadian vacations over the more conventional U.S. destinations such as New York and Florida, pushing up hotel occupancy and prices in most markets.”
The report said Canada has seen an exodus of retailers in many sectors recently, including men’s fashion, large format, and housewares. However, the bright spot for expansion remains with food and beverage, as noted by the planned retail expansions dominated by quick-service restaurants (QSR), including: Chicken: Mary Brown’s; WingsUp!; THG’s Hot Chicken; Anju Korean Kitchen; Edo Japan; Mom’s Pan-Fried Buns; Teriyaki Experience; MezzMiz; Alforat Iraqi Street Food; Osmow’s; Sultan’s Middle Eastern.
“Despite the aforementioned trade war concerns, U.S. F&B brands continue to expand into Canada, including Jimmy John’s, Bobby’s Burgers by Bobby Flay, Olive Garden and Whole Foods. New entrants into Canada are limited, but include QSR as well as a range of other categories including housewares, specialty food, home furnishings and recreation concepts such as pickleball and go-karting,” said Colliers.
“Spending on F&B remains resilient despite rising unemployment, shrinking GDP and a slowdown in population growth. QSR has built out considerably in Canada over the past decade and now plays a large role in retail leasing, both downtown and in the suburbs.
“With Canadian consumers remaining very cautious, retail sales growth will only partly recover in 2025. Growth will strengthen in 2026, but uncertainty over tariffs adds downside risk to this forecast. Canada has been riding a huge demographic boom post-pandemic, as unprecedented population growth provided a tailwind for retail and other areas of real estate such as housing and hospitality. Immigration reached triple normal levels by 2023, through a surge in international students and temporary workers. Political pushback has led to a sharp pullback in temporary residents, with population growth expected to temporarily shrink in the next year or two. However, long-term the outlook remains favourable for demographics, with a higher level of growth than the U.S. or other G7 countries.”
Stephanie Hannon, Senior Vice President, Quebec Region and National Retail Services, said that for landlords having a quantitative assessment of assets nowadays is extremely important.
“Owners are looking for information based on data. Historically, our industry has relied a lot on instinct in decision-making” but owners are seeking more data-driven insights.
“Many landlords have had to reinvent spaces quite a lot. We’ve become quite skilled at repositioning space, and these landlords are really looking at their long-term value objectives and how to fill gaps in their markets,” said Hannon.
“For many, it’s opportunistic: you can reposition your assets in a timely way. The indices we’ve created help you understand your asset needs when you’re making a change. You can quantify core drivers for the future.
“They allow us to move beyond intuition and provide a clear, comparative view of how a property is performing in its market.”
Regarding the Bay space, the likelihood of a single user is small. The most likely scenario is that those spaces will be divided up into smaller spaces.
Hannon said consumers today are much more eco-conscious about where they spend, especially younger consumers. They’re largely quality-driven, but at the same time, that demographic is quick to change their minds.
“Retailers really have to pivot to the evolving consumer landscape,” she said.
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