Retail Sales Return to Pre-Pandemic Levels in Canadian Malls but Headwinds Persist for 2023 [Interview with JLL’s Tim Sanderson]


Share post:

Retail sales growth is expected to moderate this year but despite the recent deterioration in consumer sentiment, core sales in Canada should still increase two to three per cent with most of the growth coming from inflation rather than from an increase in the volume of purchases, says a new report by commercial real estate firm JLL.

The Canadian Commercial Real Estate Outlook indicated that in 2022 core retail sales rose seven per cent year over year.

Tim Sanderson, Executive Vice President & National Lead, Retail, JLL Canada, said 2022 finished strong with retail sales at shopping centres being back to 2019 levels.

Tim Sanderson

“Traffic was back and sales were back and conversion rates were very strong. I think there’s a lot of landlords and retailers alike who are looking for that to continue through 2023,” said Sanderson. “I think the inflationary winds that seem to be blowing through the economy are going to have an impact on that.

“What we are going to see and we are seeing already, and this has started in the U.S. a couple of quarters ago, is that flight to value where retailers like Walmart and Costco and Dollarama and those value propositions are the ones where people are shifting their spending to.

“People are concerned about their level of savings. Everything costs more in an inflationary environment. The cost of groceries. The cost of fuel for their cars. So wherever the consumer can save a buck I think they’re going to be looking to do so. We’ve almost got two classes now in this country. The rich who don’t care about any of it and just continue to spend and that drives a strong business. And then there’s the rest of us who have to start looking every month ‘okay what did I spend last month to keep this household running and what’s it going to cost me this month’.”

CF Toronto Eaton Centre (Image: Dustin Fuhs)

Weary of inflation, rising interest rates, and declining home values, Canadians had put off holiday purchases as long as possible, contributing to a weaker November. Shoppers were more confident in December, however, largely overriding their intentions to cut back significantly in the spirit of the holidays and lower gas prices. In one of the strongest performances in the past decade, retail sales over the holiday season rose about six per cent year-over-year, said the JLL report.

It also said the overall vacancy rate for Canada’s major shopping centres has continued to decline and is now lower than before the pandemic. However, not all malls are experiencing the same vacancy changes, and several remain above pre-pandemic levels. Recent announcements of new store openings should have a further downward impact on vacancy.

“The low vacancy rate is being driven by the fact that there’s no new product coming out of the market,” said Sanderson. 

“Retailers that are expansion minded are looking for space and they can’t find it. I think the retail real estate development people if you will, or landlords, kind of I don’t want to say took their eye off the ball going back to 2019, but the fact we’re not seeing new product in 2023 is a result of what was happening in 2019 and 2020 because that’s the lead time for these projects.

“The major markets in this country and the downtowns in these major markets are still at poor occupancy rates for their offices. Toronto’s still at 43 per cent  . . . We still need to get people back into these offices because that fuels everything that happens around these offices whether it be restaurants or retail.”

Here’s the JLL’s look at key retail trends in major Canadian markets:


Image: JLL

With less pandemic-era restrictions than other cities, Calgary’s retail sector has bounced back faster than others. Suburban retail continues to outperform downtown, which has struggled with lagging office occupancy. Several notable retail developments have been completed in 2022: ONE Properties opened the 158,000-square-foot Bow River Shopping Centre, Canderel launched the 400,000-square-foot Taza (The Shops at Buffalo Run), and Triovest submitted a development proposal for a large mixed-use development along Stephen Avenue in downtown.


Image: JLL

Retail rents have been on the rise due to higher construction and labour costs passed through from landlords. This is also a consequence of falling supply of new retail space. Suburban retail has performed much better than the urban core, as downtown Edmonton continues to struggle with lagging office utilization. Retail investment sales reached $213 million for the year, a significant improvement from 2021. Investor appetite for well-located essential retail is strong in Edmonton, particularly owing to the risk-adjusted return compared to industrial and multi-family assets.


Image: JLL

Overall, the city’s retail market remains stable and continues to see little change year over year. The city passed a new zone-based tax system that will shift more of the property tax burden to suburban business parks like Dartmouth Crossing, Bayers Lake, and Bedford Commons. The move is meant to help stimulate downtown businesses, which will see decreasing property tax rates.


Image: JLL

Retail had its strongest year since 2014 with over $1.7 billion in investment sales. This was fueled by Groupe Mach’s acquisition of the Cominar REIT retail portfolio, as well as the closing of the final tranche of TD Asset Management’s 50 per cent share purchase of CF Carrefour Laval from Cadillac Fairview. Asking rates and foot traffic have increased throughout 2022, and vacancy rates have decreased with each passing quarter. While there is room for improvement, momentum has been returning with each passing quarter.


Image: JLL

Retail investment sales surpassed $300 million for the year. Private buyers have been the most active cohort, though Costco notably purchased its facility at 1900 Cyrville Road from LaSalle Investment Management for $42.5 million. Canadian Tire relocated to Carlingwood Mall from a prominent site at 1660 Carling Avenue. Cadillac Fairview recently announced the addition of a 288-unit tower to the city’s largest mall, CF Rideau Centre.

Regina and Saskatoon

Image: JLL

Meadows Market, a Costco-anchored power centre on the southeast periphery of Saskatoon, sold for $47 million in one of Saskatchewan’s largest retail investment sale transactions in several years.

Southwestern Ontario

Image: JLL

Retail investment sales were dominated almost exclusively by private investors (75 per cent of sale volume) and users (21 per cent). The largest sale in the region in 2022 was 970 Upper Wentworth St. in Hamilton, where Everest purchased a 79,000-square-foot retail plaza for $26 million ($329 per square foot). Across the street at Lime Ridge Mall, Cadillac Fairview has submitted a proposal to raze the former Sears building and construct two 12-storey residential towers. Retail in downtown Kitchener has struggled with lagging office occupancy; however, the construction of new residential projects are generating more foot traffic.


Image: JLL

High frequency spending data suggests that consumers are returning to physical retail in a decisive way. This is echoed by Statistics Canada data showing that e-commerce penetration has fallen from a pandemic peak of 11 per cent to about six per cent now. Once thought to be the downfall of bricks-and-mortar retail, it is becoming clear that e-commerce is a complement to in-person shopping as retailers develop omnichannel solutions like click-and-collect. Retail investment sales reached $1.3 billion for the year. Investors are encouraged by rising foot traffic across all retail segments, though most trades that have occurred have been for assets with essential needs or defensive tenancies.


Image: JLL

The city is engaging in a planning process to remake the Granville Entertainment District. Proposals include new retail offerings, cultural uses, retaining heritage character, improving pedestrian accessibility and limiting traffic.


Image: JLL

2022 was a fairly active year for retail sales in Winnipeg. Shindico acquired the 200,000-square-foot Swancoat retail portfolio of primarily essential needs assets. Meanwhile, MEC’s building at 303 Portage Avenue was sold as part of a national portfolio and they entered into a long-term lease on the property. Retail vacancy fell from 4.1 per cent to 3.2 per cent, while average rents fell slightly from a year ago. Cadillac Fairview and Shindico released plans for their redevelopment at Polo Park. The proposal would add 3,700 new housing units in more than a dozen buildings of six to 12 storeys. Construction cost is estimated at over $1 billion.

Mario Toneguzzi
Mario Toneguzzi
Mario Toneguzzi, based in Calgary, has more than 40 years experience as a daily newspaper writer, columnist, and editor. He worked for 35 years at the Calgary Herald covering sports, crime, politics, health, faith, city and breaking news, and business. He is the Senior News Editor with Retail Insider in addition to working as a freelance writer and consultant in communications and media relations/training. Mario was named as a RETHINK Retail Top Retail Expert in 2024.


Please enter your comment!
Please enter your name here

More From The Author



Subscribe to the Newsletter


* indicates required

Related articles

Iconic Flo’s Diner in Toronto’s Yorkville Forced to Close After 33 Years Amid Landlord Dispute 

Retail Insider interviewed Flo’s co-owner who discusses the “heart wrenching” situation where he is being forced to close his business that began on Bellair Street in 1991.

Anatomy of a Leader: Teresa Spinelli, Owner of Alberta-Based Italian Centre Shop Ltd.

Spinelli discusses her leadership of the popular retailer which has expanded over the years, describing how she struggled to run the company at first and grew to love it.

Upscale Canadian Fashion Brand SMYTHE Expands with New Standalone Calgary Store [Interview/Photos]

It's the second store location for the Toronto-based brand, which is seeing success with its exclusive womenswear collections.

Toronto’s CF Sherway Gardens Hits Sales Milestone with Exciting Retail Growth and Future Plans [Interview]

The shopping centre is adding new retailers as sales per square foot hit an all-time high, with plans to re-tenant Nordstorm as foot traffic grows following Eataly's opening in the mall a few months ago.

ECS Coffee Opens Canada’s Largest Coffee and Espresso Equipment Gear Showroom and Retail Space in Toronto [Interview]

The new Etobicoke location is unique to Canada if not North America, according to its founder, with coffee roasting, equipment showroom, over 500 varieties of coffee, Youtube studio and various in-store experiences. He has plans to expand the concept nationally.

New Loblaws City Market Opens in Vancouver’s ‘The Post’ Building, Adding Grocery Competition to the Downtown Core [Podcast]

Craig and Lee discuss the opening of a new Loblaws City Market in downtown Vancouver's renovated Post building, and they explore its potential impact on local grocery shopping.

Loblaw Announces $2 Billion Investment in Canada for 2024 with Dozens of New Stores and 7,500 New Jobs [Expert Comment]

The retail behemoth will be growing substantially this year, following backlash over profits as inflation continues to impact Canadians.

Dubai-Based Asian Street Food Concept ‘Wok Boyz’ Expands into Canada with Plans for Multiple Locations [Interview]

The company's founder says the popular concept, with personalized meals, has an opportunity to grow substantially with its high-quality ingredients and theatrical flare, complete with fiery customer-facing woks.

Calgary Surge Basketball Team Launches Innovative Pop-Up at CF Chinook Centre to Boost Community Engagement [Interview]

The retail activation, which opened this month, is resulting in heavier foot traffic in a quieter part of the mall.

Upscale Pusateri’s Fine Foods to Close Yorkville Grocery Store in Toronto After 20 Years

The 5,500 square foot store opened to much fanfare in 2003, with valet parking, private chefs and pricey goods. 

Loblaw and Walmart Could be Forced to Adhere to Grocery Code of Conduct with Legislation [Op-Ed]

Sylvain Charlebois says that it's rare for all of Canada's political parties to agree, signalling a shift that could force grocers to comply amid record inflation.

Factory Direct to Shut All 14 Stores Amid Bankruptcy, Liquidation to Begin Saturday

The company, founded in 1995, is one of Canada’s largest privately owned discount retailers which struggled with declining sales and increasing costs following the pandemic.