Greater Toronto Retail — Q1 2026

The Quarter in Brief

Greater Toronto entered 2026 as one of the tightest retail markets on the continent, and the first quarter did little to loosen it. Lee & Associates and JLL, both drawing on CoStar data, reported overall retail vacancy at 2.4 percent — unchanged through the second half of 2025. JLL characterized Toronto as one of the tightest retail markets in North America; Lee described fundamentals as relatively tight, with certain submarkets still performing strongly.

The softness of the past year sits almost entirely in absorption, and both brokers traced it to the same cause: the closure of Hudson's Bay anchor stores, which handed large blocks of space back to the market. Lee recorded negative net absorption of 1,457,872 square feet over the trailing twelve months; JLL reported negative net absorption of 1,505,941 square feet for calendar 2025. JLL added that, excluding the Bay closures, 2025 net absorption would have been positive.

The rest of the picture is one of a market running short of new product. Asking rents were broadly flat, holding in the mid-thirties per square foot. New supply sits near cyclical lows: the under-construction pipeline has fallen to roughly half its year-ago size, and JLL reported construction starts down 62 percent in 2025. Investment told a two-sided story — retail transaction volume in the Greater Toronto Area fell sharply year over year even as cap rates held firm and Avison Young described demand for retail assets as strong.

This report relays what the brokers reported for the quarter. It contains no forecasts or recommendations of its own; where a broker's outlook is described, it is attributed to that broker.