Major retail spaces in Canada’s largest city are lying empty after tenants are evicted or abandoned, only as development projects are put on hold due to the slowdown in the condo market.
This is an unexpected consequence of the condo decline, and there are dramatic stories: A project to redevelop the 32-acre Cloverdale Mall in Etobicoke, for example, was canceled by Mattamy Homes and Quadreal Property Group when only 10 percent of the condos sold and the mall is now actively soliciting tenants on its website.
Across Toronto, landlords are trying to lure businesses back and restructure listings, while others are simply waiting for their condos to be redeveloped or converted to other uses, such as parking spaces.
The job vacancies come as a City of Toronto report released this week showed the number of retail stores across the city fell 10.5 per cent from 2011 to 2025, with some areas seeing a three-fold decline.
Greg Evans, president and registered broker of Behar Group, said some of the projects currently in limbo have dynamic commercial uses and have created new leases for ground-floor space, but will not be built any time soon. Instead, the priority is to win back tenants, with some landlords agreeing to longer leases.
“We just had a property where the (developer) saw that the market had changed and agreed to a 10-year lease,” he said, pointing out that there are simply no new condo openings today. “A tenant today is pretty confident they’re not going anywhere for the next seven or eight years.”
According to condo research firm Urbanation, projects totaling 11,424 condos have been canceled since the start of 2024, while only a third have been implemented and most others have been put on hold indefinitely.
Adam Jacobs, head of research at Colliers, said streetscapes are empty because “theoretically a 62-story project” will be built – at some point.
“There are empty areas where you can see… where the towers will be, but are we going to wait six years?” He said, noting that the overall impact on retail vacancy in a city as large as Toronto is not significant.
Jacobs said some of the retail space across the city is difficult to snap up because there are stores that have been around for decades and may be owned by individual mom-and-pop groups, but suburban spaces are booming in comparison and investors are gobbling them up.
Mitchell Cohen, chief operating officer of Westdale Properties, agreed that the retail market is doing well.
“One thing I would say is that a vacant storefront reflects uncertainty in development, not the retail market. The market is buoyant now,” Cohen said.
“In today’s retail market, uncertainty is more expensive to the tenant than rent. A retailer needs some certainty, and they need some notice.”
Arlin Markowitz, executive vice president of the urban retail team at brokerage CBRE, said that cost can easily be $1,000 per square foot, so outfitting a decent restaurant could cost $1 million. Not many renters want to spend that much money on a short-term rental agreement.
“Landlords are willing to sign five-year leases,” Markowitz said, noting that there is simply not enough time for tenants to make the financial commitment and that developers are not giving tenants options to extend leases. “It doesn’t help developers as much as they would have liked.”
Eli Vladimirsky, vice president and sales representative at Value Insight Realty Inc., is trying to lease a series of properties on the north side of Bloor Street near the University of Toronto that once had major tenants such as Pizza Pizza, Fresh, Second Cup and a Wine Rack.
They all left because the area was due for redevelopment. Now he is trying to mix the tenants with the remaining tenants. The pizza oven is long gone from one location, but the Fresh restaurant has left behind the seating and a bar and is mostly operational.
“Some of it depends on the space. The Second Cup space can also be operational quickly. However, there is a five-year demo clause, so we are probably limited to independent tenants and local groups,” Vladimirsky said. “But some sites give 10-year clauses.”
During land development, developers value passive income from tenants, but given the speed at which development was moving, landlords wanted to get projects off the ground, Saba Haie, partner at Amdev Property Group, said of the market in general, rather than his own company.
“Sometimes it’s very difficult to find a short-term lease, and ideally, in many cases, you just want a vacant property. You know you’re in the claims process and you just want to get ready to get started on construction. You assume you’re going to incur some losses,” he said.
“Sometimes certain types of leases can make it difficult for you to continue depending on how the lease is structured. You also want to give businesses the option to get out of the lease.”
The other thing that can happen during development is that acquired properties fall into disrepair and you are then faced with the debate over how much you should invest in a building to secure short-term money from a leasehold.
On the other hand, Haie pointed out that empty buildings can incur additional costs, such as higher insurance premiums.
“The problem these days when development is so uncertain is that you can’t just keep pushing it forward because it might cost even more to fix it. You just have to balance it out,” he said.
CBRE’s Markowitz said that in Toronto, the types of leases for stalled projects do not include large flagship stores or restaurants that cannot commit to shorter terms. The downside is an opportunity for some tenants, such as the FIFA World Cup, which had a choice of pop-up locations this summer as the tournament comes to town.
“It makes a big difference,” he said, such as slightly longer leases that span half a decade, but they tend to be smaller retailers. “It’s just not enough to open a big restaurant.”
The agent hears that some landlords regret evicting their tenants too soon, but they can’t turn back now.
“We’re in a fun in-between phase. We’ll have some unique and cool things, but there will be a lot of pop-ups and that’s not ideal.”
When will it dissolve? When the condo market recovers, Markowitz said.
“It won’t stay down forever.”
• Email: gmarr@postmedia.com