The Hudson Bay Company’s collapse is driving a Canadian retail real estate reset, says a new Cushman & Wakefield report.

The shutdown of the Bay and its associated retail brands has returned about 17 million square feet in “lost” space to the market and triggered new leasing, backfilling and repositioning opportunities. In its Global Cities Retail Guide 2026: Canada, the company said the influx of space represents one of the largest single increases in availability in recent years, even as consumer demand has remained resilient. Seasonally adjusted retail sales rose 4.4% year-over-year through November 2025, with discretionary categories continuing to outperform.

The iconic department-store chain shut down last summer amid mounting debts and is going through creditor protection in accordance with federal law. A number of former Bay locations across Canada have been sold, demised and leased out or returned to landlords following Ontario court decisions. Other locations are set for repurposing or could be redeveloped once their fate is decided.

“Canada’s retail market is moving through a supply-led reset, but demand has not broken,” said Cameron Martin, Cushman & Wakefield’s Canadian research manager. “Large blocks of space have returned to the market, creating a more complex leasing environment where performance will diverge more clearly by location and format.”

The report said food and beverage tenants are emerging as a leading source of retail traffic and leasing activity across major markets.

“Food and beverage is the clearest signal of where demand is going,” said Martin. “Consumers are still spending, but they are prioritizing experience, frequency and value. That is driving expansion in quick-service and premium casual formats, while full-service operators are adjusting to tighter margins and more selective demand.”

Nationally, food inflation reached 6.2% year-over-year in December 2025, while restaurant prices rose 8.5%, increasing pressure on full-service operators and boosting demand for more price-conscious formats.

Cushman & Wakefield said 2026 is expected to be a normalization year, not one of contraction, for the sector as slower population growth tied to reduced immigration targets and a cooling labour market moderate expansion.

“Growth continues, but it becomes more disciplined,” said Martin. “Retailers are more selective, operators are more cautious, and landlords will need to work harder to reposition space that no longer fits the market.”

Toronto was highlighted as a national retail anchor, generating about $11.5 billion in monthly retail sales, with food and beverage accounting for a significant share of new openings. Vancouver was described as one of North America’s most competitive retail markets, where dining and premium retail continue to cluster in high-traffic urban corridors.

C&W’s Global Cities Retail Guide 2026 provides tailored market snapshots across Europe, North America, Asia-Pacific, and the Middle East.

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