RioCan Real Estate Investment Trust, one of the nation’s largest REITs, said it’s benefiting from both a paucity of well-located available retail space and an increased appetite among top-performing retailers for new locations.

The Toronto-based REIT added that it completed development projects totaling approximately 366,000 square feet and transitioned them into income-producing properties during 2025. The new space breaks down as 264,000 square feet of mixed-use projects with residential and retail space and 102,000 square feet of commercial retail.

RioCan, in discussing its most recent quarterly earnings, reported that its wholly owned retail portfolio ended 2025 with an occupancy rate of 98.5%. Its overall portfolio contains 168 properties with a total net leasable area of approximately 31 million square feet.

“RioCan delivered another strong year, highlighted by exceptional operating results and disciplined execution of our capital recycling strategy,” RioCan President and CEO Jonathan Gitlin said.

Canada’s retail property market “remains resilient, characterized by robust demand, limited supply and evolving consumer preferences,” according to CoStar’s latest Canada Retail Market Analytics report. However, the national retail vacancy rate increased to 2.5%, partly due to the Hudson’s Bay spaces returning to the market after the iconic retailer closed and liquidated all its stores last year.

RioCan is one of Canada’s largest REITs with a stock market value of approximately $5.7 billion. As of Dec. 31, its portfolio contained 168 properties with a total of approximately 31 million square feet of leasable space.

Looking ahead, RioCan’s Gitlin said, “We enter 2026 with momentum fueled by intensifying demand from leading retailers amid a broader market shortage of well-located retail space. This dynamic positions RioCan to generate sustainable, long-term value for our unitholders.”

Meanwhile, RioCan said its robust leasing activity from 2025 has continued into this year with 15 lease transactions completed in under two months. The recent deals include a lease renewal by Winners for a 29,671-square-foot store in Brampton.

However, underlying economic fundamentals could prove a spanner in the works, according to CoStar Analyst Ben Haythornthwaite, who said the retail outlook in Toronto, much like Canada at large, remains closely tied to a challenging economic backdrop.

“A Bank of Canada survey suggests employees perceive nearly a 20% chance of job loss over the next 12 months, and with unemployment around 9% in Toronto and 7% nationally, consumers are likely to pull back on discretionary spending in the near to medium term,” Haythornthwaite said. “This creates headwinds for retail, particularly for enclosed malls facing elevated vacancy following the closure of Hudson’s Bay stores, which reflects longer-term shifts away from the traditional department store model.

“In contrast, grocery‑anchored and necessity‑based retail is expected to remain more resilient, having benefited greatly from strong population growth over the last decade.”

RioCan also said it has “entered into a firm agreement” to sell The Underwood Apartments in Calgary, Alberta, for proceeds of $46.5 million. That deal is expected to close in the first half of the year.

Source CoStar. Click here for the full story.