Choice Properties Real Estate Investment Trust is advancing a series of leasing, redevelopment and intensification initiatives across its Canadian portfolio as demand remains strong for well-located grocery-anchored retail space.
The Toronto-based REIT ended the second quarter of 2026 with retail occupancy of 97.4 per cent. It completed 643,000 square feet of retail renewals and 83,000 square feet of new leasing during the quarter, while renewal leasing spreads averaged 12.4 per cent.
Excluding fixed-rate option renewals, the average retail renewal spread increased to approximately 20 per cent, reflecting continued demand from restaurants, liquor retailers, dollar stores and other necessity-based tenants.
Those market conditions are giving Choice the opportunity to rethink underutilized retail space, convert temporary uses into permanent tenancies and continue adding density to existing shopping centres across Canada.
Former Loblaw Space Reworked at Bloor and Dundas
One of the company’s most significant repositioning projects involves approximately 90,000 square feet at Bloor Street West and Dundas Street West in Toronto.
The space had been leased to Loblaw for storage and temporary operational uses under a flexible arrangement carrying a relatively low rental rate. Choice is converting it into a multi-tenant configuration with commitments from Shoppers Drug Mart and GoodLife Fitness.
Shoppers Drug Mart took possession during the second quarter and is fixturing its premises, with an opening targeted later this year. GoodLife is expected to take possession in early 2027.
David Mualem, Senior Vice President of Leasing and Operations, said the company was encouraged by how quickly the transition occurred. Loblaw vacated the premises during the quarter, allowing Choice to turn the space over to Shoppers Drug Mart within the same reporting period.
The Toronto property was one of two large Loblaw-leased spaces that were intentionally not renewed. Together, the Toronto and Laval vacancies totalled approximately 172,000 square feet and accounted for most of the modest decline in portfolio occupancy during the quarter.
Management noted that approximately half of the combined vacant area had already been re-leased by the time of the earnings call, with rents well above the expiring levels.
The project illustrates how landlords can create additional value by dividing oversized or underutilized premises into multiple retail units that better reflect today’s leasing demand.
Laval Redevelopment Will Follow
Choice is pursuing a similar strategy for an approximately 82,000-square-foot former Loblaw space in Laval, Quebec.
Unlike the Toronto property, the Laval redevelopment requires municipal rezoning before leasing can proceed as planned. Management said additional updates will be provided in future quarters.
Excluding the Toronto and Laval repositioning projects, Choice’s retail retention rate was approximately 80 per cent, broadly consistent with historical performance.
No Frills Preparing Former Toys “R” Us Store at Dartmouth Crossing
Choice also continues to advance the redevelopment of former Toys “R” Us locations. At Dartmouth Crossing in Nova Scotia, No Frills has taken possession of a former Toys “R” Us building and is now fixturing the store.
Management said discussions continue regarding the remaining two former Toys “R” Us properties owned through a joint venture, with additional updates expected later this year.
The conversion reflects a broader trend across Canada’s retail real estate sector as former large-format retail space increasingly attracts grocery, discount and other necessity-based retailers capable of generating consistent customer traffic.
Loblaw Renews 50 Retail Locations
While two former Loblaw spaces are being repositioned, the retailer simultaneously reaffirmed its long-term commitment to many of its operating stores.
Following the end of the quarter, Choice completed the renewal of 50 Loblaw retail leases representing approximately 3.6 million square feet. The leases carry an average five-year term and an average rental increase of 8.8 per cent, addressing roughly two-thirds of Choice’s 2027 retail lease maturities.
Mualem said renewal increases have strengthened over recent years as Canada’s retail leasing market has tightened, although future renewal packages will continue to vary depending on market, store size and existing rental rates.
The renewals reinforce the continued strength of grocery-anchored shopping centres, which remain among Canada’s most resilient retail formats.
Retail Intensification Continues
Choice also continues creating additional retail space through intensification projects on existing properties. During the quarter, the REIT completed two retail land-lease developments totalling approximately 66,000 square feet.
The largest was a 65,000-square-foot project in Kingston, Ontario. Choice also completed a smaller quick-service restaurant development at a jointly owned property in Winnipeg.
Management said retail intensification remains a key priority as the company continues generating additional value from land already under its ownership.
Waterloo Acquisition Creates Future Development Opportunity
Choice acquired a retail property in Waterloo, Ontario, for $7.4 million during the quarter. The property sits beside one of the REIT’s existing grocery-anchored shopping centres, creating a larger land assembly along a major commercial corridor serving a growing student population.
Choice has already begun pursuing approvals for additional retail density, positioning the combined property for future redevelopment opportunities.
First Capital Transaction Continues Through Regulatory Review
Choice also confirmed that its proposed acquisition of First Capital Real Estate Investment Trust continues moving through the regulatory approval process. Following overwhelming approval from First Capital unitholders and court approval of the transaction, Competition Bureau review remains the principal outstanding requirement.
Management continues to expect the acquisition to close during the fourth quarter of 2026.
President and CEO Rael Diamond also indicated that property dispositions could begin in early 2027 as Choice integrates the combined portfolio, with a larger proportion of future sales potentially coming from Choice’s existing holdings than from the First Capital portfolio.
Strong Fundamentals Support Portfolio Evolution
Choice’s second-quarter results demonstrate that Canada’s necessity-based retail sector continues to provide opportunities for strategic reinvestment.
High occupancy, healthy leasing spreads and stable demand are allowing the REIT to modernize older retail space, intensify existing shopping centres and reposition former big-box premises for tenants that better reflect today’s retail landscape.
Projects at Bloor and Dundas, Laval, Dartmouth Crossing, Kingston, Winnipeg and Waterloo each represent different stages of that strategy. Together, they illustrate how Choice is using strong operating fundamentals to improve the long-term productivity of one of Canada’s largest retail real estate portfolios.
