Canadian storefronts are sitting empty. Here’s why that’s detrimental to communities

Some downtowns in Canadian cities feel emptier than ever. The so-called “retail apocalypse,” a term coined in 2017, has been an ongoing problem for several years. However, the COVID-19 pandemic dramatically accelerated the shuttering of retail spaces.

 Some brick-and-mortar spaces survived by rapidly adapting to a new retail landscape, such as restaurants converting into grocery stores and bars to bottle shops. Other retailers had to rely on emergency government loans,  which must be repaid shortly.

Many businesses, however, could not adapt to the new landscape and were forced to close permanently. In some Canadian communities, this has led to a large presence of shuttered retail stores in downtown areas, making some shopping areas feel dreary.

 This has become a significant problem in some communities, transforming neighbourhoods into neglected areas by destroying their cultural character while leaving residents with fewer amenities. Read ahead to learn about the scope of the problem and some solutions that can help put life, character and charm back into Canadian communities.

Rising costs

In Thunder Bay, Ont., six more businesses have closed than opened every month since July 2022. One major factor leading to these closures is inflation.  

The problem is far from localized. Statistics Canada’s most recent monthly estimate of business openings and closures noted that retail trade was the second largest contributor to nationwide business closures, as businesses decreased for six straight months. The report also lists high accommodation and food services industry exit rates. Between retail trade, accommodation and food service establishments, there was a shrinkage of 1,106 active businesses in November 2022.

Reluctant landlords

Rising rents are also a main driver of retail and restaurant closures.

One such instance is Lambretta Pizza, a popular restaurant in Toronto. Lambretta had to close its Roncesvalles location in late 2022 due to a 30 per cent rent increase. The owner, Celina Blanchard, said she already paid $12,000, so the rent increase was too much to afford. Blanchard noted that there were usable empty spaces for rent in the same neighbourhood, but the rents were similarly unaffordable. These storefronts are expected to sit empty until large companies with strong finances rent the spaces… When this happens, iconic stores like Lambretta disappear, leading to an emptier, indistinct cultural identity in Canadian neighbourhoods.

Blanchard is not the only one who has noticed this trend. A report by the Better Way Alliance, a self-described ethical employer network, found that over three-quarters of commercial tenants have experienced a one-time rent increase of 10 per cent. The report also found that one in six commercial tenants experienced a 50 per cent increase in rent, and more than half anticipate being forced out of their tenancy due to rent increases.

Landlords themselves have also seen costs increase. In 2023, Toronto’s property tax increased by 5.5 per cent, while in Vancouver, it jumped a staggering 10.7 per cent. Additionally, landlords may have an increased cost associated with maintenance. That said, these cost increases, while significant, are generally much lower than rent increases.

A solution where everyone wins

Landlords own properties to make money, and few businesses would fault them for generating profit from their investments. If a landlord did not earn a profit, there would be no incentive to rent the property they own. They are running a business, after all.

That said, leaving vacant commercial space may not be in the best interest of a landlord’s profits. Of course, finances vary from investment to investment, but if a landlord pays into a commercial mortgage without earning rent off it, that is a significant amount of money lost for them. Instead, a more gradual and accessible rent increase is better for commercial landlords and tenants. Many landlords practice this successfully, cultivating strong business relationships while earning an income.

It may be in the best long-term interest, both in terms of ethics and profits, for landlords to work collaboratively with the businesses that lease their properties. Working together so commercial tenants and landlords both earn a living is possible and well within reach. With this collaboration, everyone can profit. Neighbourhoods can be revitalized, making them safer and better for consumers, and landlords can profit off their investment while retaining tenants who bring life to downtown spaces. That way, we can revive and maintain the cultural identity of Canadian cities instead of having empty, shuttered storefronts plaguing our neighbourhoods.