Canada’s retail vacancy rate is expected to hold relatively steady near 2.5 percent over the next year as the sector continues to absorb the fallout from the closure of Hudson’s Bay stores, according to a new forecast from CoStar Group, a global provider of online real estate marketplaces, information and analytics in the property markets.
The closure of the Bay stores dealt a significant blow to Canada’s retail sector in 2025. Vacancy in the country’s shopping malls jumped from 3 percent to 8 percent in second quarter 2025 alone, as net absorption in that quarter came in at negative 5 million square feet. Canada’s retail construction, meanwhile, is at its weakest point in a decade. Construction starts have remained below 1 million square feet per quarter since third quarter 2025, and only about 5 million square feet of retail space was under construction in second quarter 2026 — the lowest level since the pandemic.
Across the retail sector as a whole, the
