The Retail Sector shows promise as Zellers returns to Canada

The suburban retail market is primed for a comeback as a result of major retailers opening “new” locations in response to widespread store closures during the pandemic.

Retailers were compelled to close their doors as the pandemic spread and lagged on, leaving many suburban areas with vacant storefronts and stagnated property values. However, as the effects of the pandemic steadily recedes and customer confidence is on the rise, major retailers are turning back to suburban areas because of the lower rents and growth potential they offer.
TRREB reported that total commercial sales in Q4 2022 were down to 224 sales, from 430 a year earlier in Q4 2021. Sales in the industrial sector amounted to 80 in Q4 2022 – down from 142 sales in Q4 2021. Commercial/retail sales were down from 178 in Q4 2021 to 73 in Q4 2022. There were 71 office sales in Q4 2022, a drop from 110 sales in Q4 2021.

For Simcoe County, there are currently 26 active MLS listings in the retail sector. As of March 2023 the average cost for purchasing retail in Simcoe stands at $572/sf.

The retail asset class is anticipated to benefit significantly from this revitalization by Zellers. First and foremost, it will breathe new life into regions that had suffered from loss of convenient retail, boosting foot traffic and property values. Investors will be well-positioned to benefit from the retail sector’s revival in suburban areas if they move swiftly to capitalize on this trend. Investing in properties in these areas now will allow you to benefit from the increasing demand for retail space and experience a consistent stream of rental income.

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