RioCan shifts to annual rent increases in leases amid tight retail market

Jonathan Gitlin, president and CEO of RioCan, joins BNN Bloomberg to discuss the company's 2026 Q1 results.

TORONTO — RioCan Real Estate Investment Trust says limited retail space supply has allowed it to embed annual rent hikes in almost all of its new lease agreements.

The retail-focused real estate trust reported a retail occupancy rate of almost 99 per cent last quarter, consistent with a year earlier and longer-term trends.

The firm says the high costs of building new shopping centres, and the lack of suitable new land on which to build, means supply is expected to remain limited.

The result is rising rents, with existing tenants seeing rates jump 20.1 per cent at renewal in the quarter ending March 31, compared with increases of 17.3 per cent for tenants at renewal a year earlier.

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New tenants paid 58.5 per cent more than previous tenants in the last quarter, a result that compared with increases of 18.3 per cent in the same quarter last year, though RioCan said a substantial part of that was related to new leases for the empty HBC buildings.

Oliver Harrison, senior vice-president of leasing and tenant experience, said on an analyst call Tuesday that rents are also no longer just going up at lease renewal.

He said that over the past 12 to 18 months, the firm has used the tight market to phase out leases that didn’t have rent increases embedded.

“New leases do not have any fixed-rent options,” Harrison said.

“Annual growth is a concept that, two years ago, was challenging to get tenants to agree to. Ninety-eight per cent of our deals now have some form of annual growth embedded in the negotiation.”

The push helped RioCan report a profit of $93.16 million or 32 cents per diluted unit in its latest quarter, up from a loss of $84.16 million or 28 cents per diluted unit a year earlier.

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Revenue reached $322.31 million during the three months ended March 31, down year over year from $355.83 million.

Continually increasing rents will also set up the company better for the longer-term, said Harrison.

“We are leveraging all aspects of this market to produce not only the best economic outcome of these deals, but from a long-term value creation and flexibility, I think we’re doing extremely well.”

This report by The Canadian Press was first published May 5, 2026.