Toronto’s Retail Market Finding ‘Equilibrium’ as Transit Ridership and In-Person Dining Bounce Back: JLL Report


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Toronto’s retail market is moving towards equilibrium as foot traffic and dining improve, according to a recent report by real estate firm JLL.

“TTC (Toronto Transit Commission) ridership has rebounded significantly since the height of the pandemic, with additional growth expected from new rapid-transit lines under construction. The TTC is operating at service levels above current demand in anticipation that ridership will eventually catch up,” said the report. “Overall ridership is at about 74 per cent of pre-pandemic levels, with weekend ridership already at 75-80 per cent, demonstrating that riders are taking more leisure and discretionary trips despite recent security issues.

“Toronto’s transit ridership, as reported by the Urban Institute, is currently among the most heavily used transit systems in Canada and the U.S., demonstrating its importance to the city’s residents and visitors. Beyond public transportation, visitor numbers are beginning to approach pre-pandemic levels, indicating a recovery in tourism. Although some gaps remain in visitor numbers, particularly from outside Canada, this represents an opportunity for growth as international travel continues to recover.”

Union Station (Image: Dustin Fuhs)

Paul Ferreira, Senior Vice President at JLL, said from a retailer’s perspective in general sales are still relatively strong in most categories. 

Paul Ferreira

“Everyone has an eye on high interest rates and they’re impacts rippling through the economy. These things are taking time. Everyone has an eye towards what’s Christmas going to be like. What might sales be like in the New Year if consumers continue to reduce their discretionary spending,” he said.

“Looking backwards historically, sales have still been strong in a broad sense.”

JLL said retail sales in Toronto have kept pace with retail inflation, growing by two per cent year-to-date. This demonstrates a resilient market despite increasingly challenging times for shoppers. Consumer spending has maintained a steady pace, reflecting a positive retail environment, it said.

“Used cars, shoes, health and personal care products, and convenience items have emerged as the top performers, reflecting consumers’ search for value, convenience, and personal well-being,” explained the report.

“In contrast, growth in specialty food and home improvement has slowed, suggesting that consumers are focusing on essentials and buying fewer homes. Gasoline sales have also declined, as gas prices have come down from last year’s highs.

“Ontario’s food-service industry, particularly full-service restaurants, has performed exceptionally well. Sales in this sector have now surpassed pre-pandemic levels, indicating a strong recovery and renewed consumer confidence in eating out.”

33 Yonge Street (Image: Dustin Fuhs)

Ferreira said the return to office is a story that’s still playing out in Toronto. Anecdotally, he said he’s hearing of major employers in the downtown core trying to introduce increased requirements through the end of this year of having more employees back in the office more regularly.

“We’ll see how that contributes to footfall in the downtown,” he said. “The report that came out (recently) from the BIA had September hitting a new peak of 53 per cent overall with a peak on Wednesdays at 69 per cent. That’s still not back to where we were.

“But I think we’re starting to see the trend continue to go up on the footfall downtown with respect to the Monday to Friday during the week.”

He said there’s quite a significant number of new full-service restaurants opening in the downtown core over the next year or so. It’s in everyone’s interest to start seeing more employees more regularly make it to the offices in the downtown.

JLL said the local retail leasing market is experiencing low retail completions, indicating a competitive market for new retail space. 

“Especially in a high-interest-rate environment, developers have demonstrated a cautious approach to new projects, which may help maintain stability in the market. With a slowdown in net absorption, the market is moving toward a more balanced relationship between supply and demand, where landlords should maintain stable occupancy rates,” said the report.

“Neighbourhood centres experienced strong absorption in the first half of 2023, driven by the development of new residential areas in the Greater Toronto Area. Retail in these areas benefit from increasing population density and demand, creating opportunities for growth.

“The arrival of Costco in Islington, Etobicoke not only demonstrates confidence in the local market but also represents the successful infill of a former Sears warehouse. In addition, StatCan data suggests a notable shift in consumer preferences, leaning towards general- merchandise stores such as warehouse clubs, supercentres, and similar retailers.”

Costco Rexdale NW Toronto (Image: Costco)
UNITY Fitness – Harbourfront (Image: Dustin Fuhs)

JLL said the limited-retail development pipeline suggests that retailers will have to look to future supply to secure space. The completion of major notable projects such as The Well, Sugar Wharf, and YSL downtown this year, as well as the upcoming retail completions at the Galleria Mall in West Toronto next year, will further elevate the local market. However, there are no major deliveries planned for 2025.”

The report said office and retail trends are merging. The office sector is also taking a more experiential approach, incorporating amenities and services that create a dynamic and engaging environment for occupants. This trend benefits the retail sector, as the amenitization of office buildings attracts foot traffic and potential customers.

“In addition, the flight to quality in the office market not only enhances the workplace experience and employee well-being but also positively impacts the retail sector. The increased foot traffic, enhanced workplace experience, and vibrant downtown atmosphere that result from quality office space contribute to increased foot traffic and potential sales for nearby retail establishments,” said the report.

The Well at Front & Spadina (Image: Dustin Fuhs)
The Well in Toronto (Image: Dustin Fuhs)
Indigo at The Well in Toronto (Image: Dustin Fuhs)

Ferreira said new construction retail opportunities will be part of large-scale residential developments happening in the inner city.

“The mall market continues to show strength and signs of a rebound in foot traffic. After a significant decline in vacancy last year, vacancy rates have continued to decline slightly this year, indicating healthy demand for mall space and a positive outlook for the industry,” said JLL.

“The positive momentum in the mall market is supported by a strong comeback in new-store openings and in relocations, particularly in the apparel and dining sectors. This activity reflects retailers’ renewed confidence in the mall environment, and the presence of these new offerings enhances the overall shopping experience and attracts foot traffic.

Yorkdale Shopping Centre (Image: Dustin Fuhs)

“Rising sales per square foot highlight the increasing productivity and attractiveness of mall space while growing foot traffic speaks to the continued appeal of the mall experience for shoppers. While some malls have yet to fully recover from the impact of the pandemic, the overall upward trend suggests a steady recovery.

“While downtown malls and mixed-use centres with an office component have experienced a somewhat slower recovery than other property types, this is due to the gradual increase in office occupancy. As more employees return to the workplace, the foot traffic and overall vibrancy of these malls is expected to improve in line with the broader recovery in office occupancy.”

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.


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