Brick-and-mortar retail resilient as macroeconomic storm clouds gather
Population growth drives retail traffic and demand for space
Howard Chai, May 1, 2026
Online shopping has been the bogeyman of brick-and-mortar retailers since well before the COVID-19 pandemic forced everybody online.
But the reports of the death of in-person retail were greatly exaggerated.
“We’re always talking about the demise of retail because of e-commerce, but it’s persevered over the years,” said Raymond Wong, vice-president of data solutions with Altus Group.
A survey of investment intentions Altus Group conducted last fall indicated that retail was the top choice, thanks to the promise of steady cash flow and appreciation due to few purchase opportunities.
“Number one on the list is still retail – especially food-anchored retail strips – followed by apartments, industrial and office,” Wong said.
Jon Buckley, senior managing director of Marcus & Millichap’s Western Canada NNN Group, which specializes in single-tenant triple-net (NNN) assets, believes transaction volumes and investor interest are now past pre-pandemic levels across all retail asset classes.
“What we’ve noticed post-pandemic is that because there was a negative view towards retail assets for so long, there wasn’t a lot of new supply coming online,” he said. “If anything, you’d see older retail centres being redeveloped into mixed-use residential with retail in the podium, but there wasn’t a lot of new product coming online. And as retailers have continued to perform well, we’ve seen excess tenant demand and limited new supply, so that’s created upward pressure on lease rates. Strong fundamentals and strong metrics have driven a lot of investor demand back towards retail now.”
While grocery-anchored centres and open-air retail strips have shown particular strength, the NNN properties his team specializes in have also performed exceptionally well. Quick service restaurants with drive-thrus are a case in point, thanks to the scarcity of locations.
“There’s just not a lot of corners remaining where you can go and put a drive-thru,” he said. “So, in those existing facilities, they’ve seen upward pressure in rents.”
Drive-thru restaurants have replaced financial institutions as tenant of choice for buyers of single-tenant assets thanks to their reliable income, exceptional covenants and long-term leases.
Most of the big banks have sold their real estate in recent years, Buckley said, so most bank locations are owned by private investors – also the most active type of retail investor in 2025.
This is the case not just for single-tenant assets but also some of B.C.’s largest retail deals last year, including the $140 million acquisition of 798 Granville St., Vancouver, by GJ Group Robson Inc. and Shato Holdings’ $137 million acquisition of Willowbrook Park in Langley.
On the Prairies, one of the most active buyers in recent months has been Montreal-based real estate investment firm Leyad, which acquired St. Vital Centre in Winnipeg for $160.5 million earlier this year as it focuses on properties delivering consistent returns in growth markets.
“This acquisition embodies everything we look for in a community shopping centre,” said Leyad president and CEO Henry Zavriyev in announcing the purchase. “St. Vital Centre is dominant in its market, anchored by essential retail, deeply embedded in the daily lives of the community, and positioned for many decades of continued success. We are proud to become its long-term steward.”
Originally built in 1979, St. Vital Centre underwent a comprehensive renovation and expansion in 1998. It is now one of the top-performing shopping centres in Manitoba, with 926,310 square feet of gross leasable area and 160 retailers, including Indigo, SilverCity, Dollarama, London Drugs and Walmart.
The economic prospects of the Prairies underscore Leyad’s confidence in the region’s retail space.
“The Prairies have such heavily diversified industries and are so resource-rich that they will be great economic engines when we look at a longer-term horizon – 10-plus years,” Zavriyev said. “We’ve built a platform around consistent properties that are resilient during various economic cycles. For us, the best opportunity is in the Prairies – Manitoba, Saskatchewan – and we’re looking at a lot of other opportunities.”
Despite the collapse last year of the 355-year-old Hudson’s Bay Co., which filed for creditor protection in March and closed all of its stores by June, mall owners have been successful in backfilling the space.
Leyad, for example, has filled more than 80 per cent of the 323,000 square feet in its portfolio vacated by The Bay. This includes 60,000 square feet at Londonderry Mall in Edmonton, now home to Zellers.
Primaris REIT and others have announced plans to subdivide some of the vacant space into smaller units or demolish it for new construction.
Redevelopment is not an unusual strategy, whether it be a partial redevelopment that adds other uses such as residential or the complete makeover of a site. Yet last year saw fewer redevelopment projects come forward.
“We’re seeing a diminished amount of new redevelopment opportunities on the retail side,” said Wong. “Owners are always looking for ways to increase value and allow for higher densities, but it comes at a cost. What is the potential return on the property if you’re gonna spend another $10 million or $100 million on it? Will it increase revenue that much more or does it make more sense as its existing use? The performance has to make sense.”
A big question in the months to come is consumer spending, which is under pressure due to hikes in energy costs and other expenses. A rise in unemployment could shift spending toward staples rather than discretionary items.
“[Unemployment] impacts the retail side because people are then focusing on necessities and less on the nice-to-haves, and that may impact the traffic,” Wong said.
But this strengthens the hand of grocery-anchored centres and other needs-based retail.
“The demand for retail as an investment product, by owners and investors, remains strong despite all of the discussions about the slowing economy and the pullback of retail,” Wong explained.
Western Canada is expected to remain strong, and Buckley believes single-tenant NNN assets will continue to be in demand as well.
“Population growth and new rooftops are gonna attract these types of assets, but I’d say from an investor standpoint, they’re looking for length of lease, covenant, and then I’d say age of improvements and quality of improvements,” he said. “It’s less so location-specific as it is, say, lease-specific.”
Both Buckley and Wong are keeping an eye on the larger macroeconomic indications that can have an impact on both investment sentiment and consumer spending.
“It’s tough to forecast exactly what’s going to happen with bonds and lending rates, but if we see some settling in those, that will help with transactions,” said Buckley. “More certainty in the market is really good, and I think will drive further volume of transactions in 2026.”
www.westerninvestor.com/british-columbia/brick-and-mortar-retail-resilient-as-macroeconomic-storm-clouds-gather-12191828
