Calgary’s retail real estate market will remain imbalanced for the foreseeable future, says a leading veteran broker who specializes in the asset class.

Andrew Sherbut, a Barclay Street partner and vice-president, made the comment in an interview with Connect in the aftermath of the company’s new local quarterly retail property report.

“One of the things that everybody has realized in commercial real estate, whether it be retail or office or industrial in Calgary, is that really there has been, I would say, a tightening market,” said Sherbut. “We have seen now for a full year and a half, two years, sub 5% vacancy, and so that has probably put the most pressure on retail and industrial, for sure.

“But retail, we’re just seeing the numbers continue to go down and down. What we like to see, from a brokerage perspective, is a more balanced market. I don’t see that happening in the immediate future.”

As Connect previously reported, Calgary’s retail-property inventory expanded by nearly 700,000 square feet in 2025, reflecting a year of steady new supply amid tightening market conditions, according to Barclay Street.

The company’s fourth-quarter 2025 market analysis shows total retail inventory reached approximately 45.6 million square feet by year end, with new space delivered through a series of mixed-use and street-front developments across the city. Notable completions included EV606, The Mondrian, Frontier, Junction 88 & Block C, Fourth Street Lofts and The Podium.

Despite the increase in inventory, overall retail vacancy declined to 3.4% in the fourth quarter of 2025, marking a 90-basis-point improvement year-over-year and keeping available space below what the brokerage considers a balanced market threshold of 2 msf. The tightening supply has begun to place upward pressure on rental rates in several retail nodes.

Sherbut attributed the situation to Calgary’s rapid population growth in recent years, which has resulted largely from immigration and in-migration from other parts of Alberta and Canada.

“So, one of the things that we’re noticing right now is, for the foreseeable future, demand as is outpacing what we’re bringing to market by way of new development,” said Sherbut. “We’re finding right now that it’s heavily favoured towards being a landlord’s market.”

Service-based retailers, such as medical and personal-services providers, grocery-store chains and quick-service restaurant operators are driving the demand, he added.

Larger box space is being filled by value-oriented retail: Thrift stores, Dollar stores and second-hand-goods retailers lumped into one category.

“I would say that that, probably, what we can expect for the next year is a continuation of this tight market,” said Sherbut. “We do have some developments in the pipeline right now that I think will give some retailers some more options.

“But, being one of the leading cities in Canada with population growth, I think that we’re going to continue seeing this low-vacancy market.”

New development continues to favour smaller-format units, typically ranging from 1,000 to 3,500 sf, aligning with demand from the service-based and neighbourhood-oriented retailers. Additional retail space remains in the pipeline, with many projects expected to complete in 2026 or early 2027, including Vesta Properties’ Broadway on 17th and mixed-use development in the Beltline, which will include about 70,000 square feet of retail space.

As with other cities, Calgary’s mixed-use projects are helping to alleviate the retail sector’s demand pressures.

“We’re seeing a large emphasis on mixed use,” he said. “This would probably be a result of the demand for residential and purpose-built rental. We are seeing most of these projects are getting built, whether it be conversion from office to residential and/or brand new development. They all have some form of main-floor retail offering. Now, they’re not large faces by any means, but they are, you know, in line with the categories I mentioned.”

Sherbut expects the “mixed-use mindset” to increase in coming years. But he noted that new retail developments are tied to densification efforts in urban areas, such as the one in the Red Mile area of 17th Avenue and the Beltline, located just off downtown.

“I would say that there’s going to be a little bit more [retail] supply that’s coming to market by way of these mixed-use developments,” he said. “But it’s not enough to match the population growth that we’ve had and to serve the demand that already exists.”

Barclay Street reported that overall retail occupancy rose 130 basis points year-over-year, with vacancy declines recorded across most city quadrants. The southwest quadrant was the lone exception, posting a modest increase in vacancy.

Despite the pressure that it is facing and the expected ongoing imbalance, Sherbut views the local retail sector as being “very strong.” Alberta’s largest city is just catching up to other Canadian major markets in which demand tightened earlier, he added.

“Calgary always had space available, and it’s just been in the last couple of years that that has, I would say, tightened,” he said. “If there’s retailers that are looking at certain markets in Calgary, there may not be an existing location or existing opportunity available, so they put their name on the waitlist and they work with market brokers like ourselves. They work with landlords, developers, and they’re all in the queue for future projects.

“That’s a positive, I would say, indicator of the strength of the market. It’s just that there aren’t spaces available for tenants that are looking for them at this moment. And, we see that continuing. Even with bringing on the projects that are coming in right now, that are in the development pipeline, I think that there still won’t be enough space to satisfy the demand.”

Retailers need to be ready to capitalize when opportunities arise, he said.

“I think the most crucial piece of advice that we give is just working with market experts,” he said. “In a balanced market, you had more time to make decisions. So, I think it’s important, when you have a tightening market like we do right now, to stay informed and and to be ready to execute or follow through on locations.

“Because what we’re finding right now on a lot of our landlord mandates is, we’re getting inquiries from groups, and then we don’t hear from them for three months and we lease the space to another business, small business or national business or regional entity. They call back and they are surprised to learn that the space has already moved.”

As in a hot residential market, retailers who have financing already underway and are familiar with locations in which more projects are coming to market will set themselves up for success.

“Because it is a landlord market, landlords aren’t necessarily rushing into transactions,” he said. “They’re waiting to make sure that they’ve captured all the interested parties.”

Photo: Courtesy of Barclay Street