Canada's Retail Market Is Still Recuperating From the Closure of Hudson's Bay Stores
CoStar Group's Canadian economics team forecasts that Canada's retail vacancy rate will hold relatively steady near 2.5% over the next year as the sector continues to absorb the fallout from the 2025 closure of Hudson's Bay stores. The Bay closures pushed overall retail vacancy from 1.8% to 2.5% and drove mall vacancy from 3% to 8% in Q2 2025, when net absorption was negative 5 million square feet. Retail construction is at its weakest point in a decade, with only about 5 million square feet under construction in Q2 2026 — the lowest level since the pandemic.
Key figures
- Rent growth q1 2025
- about 4%
- Rent growth q2 2026
- just above 2%
- Mall vacancy q2 2025
- 3% to 8%
- Rent growth forecast
- bottoming near 0% by Q2 2027, rebounding to about 3% by end of 2028
- Net absorption q2 2025
- negative 5 million square feet
- Monthly unique visitors q2 2026
- 118 million (CoStar Group websites)
- Construction starts since q3 2025
- below 1 million square feet per quarter
- Canada retail vacancy rate forecast
- 2.5% (steady over next year)
- Overall vacancy pre post bay closures
- 1.8% to 2.5%
- Retail space under construction q2 2026
- about 5 million square feet (lowest since pandemic)
AI analysis
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