TORONTO — RioCan Real Estate Investment Trust reported its retail committed occupancy rate hit a record high of 98.9 per cent in its third quarter, driven by low supply of new space and robust demand from retailers.
The rate marked an increase from 98.4 per cent in the same quarter a year earlier.
Chief executive Jonathan Gitlin says there’s been little new supply that’s come online over the past decade or so, largely because it hasn’t been economically viable to build new retail space.
“That’s largely just a result of, one, for many years, there was the threat of e-commerce, which has dissipated substantially since post-COVID. Two, now there’s just the economic realities of what it takes to build new retail,” he said in a phone interview on Tuesday.
It takes around $600 per foot to build a new retail space, which will increase the average rent to $45 per square foot for the economics to work, he said.
The company reported its average net rent per square foot for a new lease was $31.45 in the third quarter, up 32 per cent from last year.
“There is a market difference between the rents that we’re currently getting, or market rents, and what you’d need to justify significant new supply,” Gitlin said.
Finding enough land to build meaningful new retail supply is also very difficult, especially in major cities, he added.
That has left limited existing space for retailers to move into.
He said the company’s strategy of focusing on necessity-based tenants, like grocery stores and pharmacies, continues to pay off for its retail portfolio.
Many larger companies — including the likes of Loblaw, Walmart, Costco and Dollarama — are vying for more space, especially in the larger cities, Gitlin said.
But small- and medium-sized businesses are also an important part of the retail landscape, he said.
“Any neighbourhood shopping centre will always benefit from having, let’s say, a dry cleaner or a local restaurant or smaller gym,” he said.
“It adds to the flavour of the shopping centre and, in our minds, is actually a vital component of any good shopping centre.”
Rising inflation, a slowing economy and now higher borrowing costs have started to weigh on some businesses, but Gitlin said RioCan is still seeing leasing demand from small businesses, particularly those in the services sector.
HBC, meanwhile, has taken its spot in the rear-view mirror and has no financial drag on the company’s balance sheet anymore, Gitlin said.
RioCan took hundreds of millions of fair value losses last year after its joint venture with HBC collapsed as part of the department store’s bankruptcy.
RioCan is also at the “tail end of exiting the residential business,” Gitlin said.
The company began inching into the residential real estate sector about ten years ago when the housing market was showing signs of accelerating. “We took advantage of the cycle,” he said.
Now that the tides have turned and a chill has been put on the housing market, RioCan has been divesting or monetizing much of its residential portfolio over the past few years. Gitlin said that will continue as the market improves.
RioCan reported a profit of $122.6 million during the third quarter, compared with a loss of $120.3 million a year earlier.
The profit amounted to diluted net income per unit of 42 cents, up from a diluted loss per unit of 41 cents last year.
Revenue was $304.8 million during the period ended Sept. 30, down year-over-year from $371.2 million.
National Bank analyst Matt Kornack said RioCan’s operating performance was consistent with expectations. Expectations for the fourth quarter, meanwhile, remain strong, he said in a note on Tuesday.
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Ritika Dubey, The Canadian Press
This report by The Canadian Press was first published Nov. 3, 2026.
