Another wave of workers are expected to return to Downtown Toronto in the fourth quarter of this year as companies encourage their employees to return to the office, according to the Toronto Urban Retail Report by commercial real estate firm JLL.
“Although most workers are returning to work only two to three days a week it is estimated that over 50 per cent of Downtown Toronto’s daytime workers have returned to the office which has helped boost retail sales,” it said.
The average availability rate across the 11 retail corridors tracked by JLL was 11.03 per cent, totalling 145 storefronts. Bloor Street West from Yonge Street to Avenue Road had the highest percentage of retail available (23.61 per cent) while Yonge Street from Eglinton Avenue to Blythwood Road had the lowest retail availability (3.48 per cent).
“Surprisingly, there were fewer storefronts available on Bloor Street West (Yonge Street to Avenue Road) in Q3 2022 than in Q3 2019 when there were 26 storefronts available for lease,” said the report.
“King Street West (Spadina to Bathurst) has an availability rate of 19.74 per cent, but nine of the 15 King West availabilities are in Allied and Westbank’s “King Toronto” development; King West has the second lowest availability rate (7.89 per cent) if King Toronto is not included.”
The report said average asking rent across Toronto’s 11 retail corridors was $92.08 per square foot led by Bloor Street at $249.71 per square foot, and followed by Yonge Street (Queen Street to Gerrard Street) and Yorkville Avenue (Yonge to Avenue) at $111.17 and $108.33 per square foot, respectively.
Brandon Gorman, Senior Vice President, Broker, Agency Retail Group, JLL, said there has been more activity and leasing in the past few months in the retail market.
“Earlier this year, we were seeing a lot of food and beverage operators and most of the interest that we had across our portfolio was with food and beverage operators. In the last 60 days or so, we’ve had a lot of other types of uses in traditional retailers, specifically on Queen Street and Bloor Street,” he said.
“So it certainly feels like things are coming back.”
Gorman said fueling the return are a number of factors. Many people are back out and about thinking we have gone past COVID. There have also been opportunities in the market where landlords have been more willing to negotiate or induce deals, particularly early on in their terms.
“Retailers who managed themselves and weathered the storm are now moving forward. They’re cautiously optimistic and they’re taking advantage of some opportunities,” he said.
Gorman said the availability on those Toronto corridors is higher than people would have guessed but it’s not as high as some people thought it might be coming out of COVID.
The report said the City of Toronto’s CaféTO program has been a big help to restaurants and bars providing the opportunity to expand their outdoor dining space through sidewalk cafés, curb lane cafés or patios on private property.
“Many Toronto restaurants are reporting an increase in sales activity with year over year sales in 2022 higher than pre-pandemic levels in 2019,” said JLL. “The most active categories from a retail leasing perspective are food & beverage (quick service restaurants, fast casual and full-service restaurants), dental, medical, veterinary and pet stores while leasing activity from apparel companies and luxury goods has also remained resilient on select high streets.”