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Retail construction starts in major Canadian markets fell to 1.5 million square feet in the first half of 2026, the lowest level in a decade, according to JLL. The decline is making it harder for expanding retailers to find rental space.
Store owners might be having a harder time finding rental property as the amount of retail space under construction in major Canadian markets dropped to its lowest level in a decade.
Canadian Retail Construction Hits Decade Low
Commercial real estate firm JLL says retail construction starts amounted to 1.5 million square feet in the first half of this year. That was down from 2.7 million square feet a year prior and 5.3 million square feet in the first half of 2016. The previous low during the decade came in 2023, when retail construction starts totalled 1.9 million square feet.
JLL senior vice-president of retail Paul Ferreira attributes the drop in starts to rising building costs, redevelopment of existing retail space and the cancellation of some residential projects that would have had stores on the ground floor. Ferreira says the decrease means retailers wanting to grow are finding it more challenging to rent space and are having to increasingly adapt their plans to work in the fewer new locations out there.
The data covers major Canadian markets and signals a tightening supply of new retail square footage. With fewer new locations available, expanding retailers may need to rethink store formats, locations or timelines. Retail construction starts have now fallen well below the levels seen in 2016, when they reached 5.3 million square feet in the first half of the year. The 2023 total of 1.9 million square feet had been the previous decade low before this year's 1.5 million square feet.
Retailers Adapt To Scarce New Space
JLL tracks commercial real estate activity across major Canadian markets and released the figures on retail construction starts. The decline comes as building costs rise and existing retail space is redeveloped, reducing the pipeline of new retail construction. Cancelled residential projects that would have included ground-floor stores have also removed expected retail space from the market. Ferreira said retailers that want to expand are having to adapt their plans because fewer new locations are available to rent.
The report was first published by The Canadian Press on Oct. 2, 2026. Tara Deschamps of The Canadian Press reported the story.
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CP24:Retailers face tougher search for space as construction drops to 10-year low: JLLThis story was compiled and edited by the HeadTopics newsroom and HT AI from the reports above.
Canadian Retail Commercial Real Estate Construction Starts Retailers Rental Space Canadian Retail Construction JLL Retail Report Retail Space Shortage Commercial Real Estate Canada Paul Ferreira
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