Limited Canadian retail real estate supply could lead to more rent increases in the second half of 2023, says a new CBRE report.

Higher construction costs have factored into a softening supply pipeline, said the brokerage firm in its first-half 2023 Canadian retail rent survey, which examined 11 nationwide markets.

“The current economic climate, inflation, and elevated interest rates have paused leasing activity amongst some retailers, but not all,” said CBRE in the report.

Montreal, with eight, and Calgary, with six, reported the most-rental rate increases related to formats or key urban areas. Halifax and Toronto were next with five and four, respectively.

Personal services and quick-service (or fast-food) restaurants are in the highest demand. Open-air centres comprise the favoured format. Some downtown retail markets have been challenged by reduced office occupancy as large numbers of employees work remotely. But results are mixed and urban retail formats saw the most rent increases.