Commercial rents have long been on the rise in Toronto as the city has grown denser over the years, but — just like pretty much everything else — that changed in 2020. 

A new StatsCan report released this week shows that commercial rent prices fell significantly in Toronto over the past year, a trend which was largely driven by a decline in the retail sector.

Commercial rents in key Canadian economic markets, fourth quarter 2020: Commercial rents fell 0.6% in the fourth quarter, following a 0.5% (revised from +0.7%) increase in the third quarter. https://t.co/UIXzuTNoPH pic.twitter.com/iiLgJCn2zQ

— Statistics Canada (@StatCan_eng) February 25, 2021

"The year 2020 was exceptionally challenging for commercial landlords and tenants alike, beginning with the economic shutdown in mid-March when all retail businesses, except those deemed essential, closed to slow the spread of COVID-19," reads the report. 

"Office buildings became largely vacant, as many employees worked remotely. Retail e-commerce continued to climb as consumers turned to online shopping."

According to the report, commerical rents in general fell by 2.6 per cent in Toronto in Q4 of 2020, which lines up with when the city entered its second lockdown. 

In the same period, commerical rents were down by 3.4 per cent year-over-year, which can be attributed to "sharply reduced rents for retail buildings." 

Rent prices for retail buildings, specifically, were down 13.6 per cent year-over-year in the fourth quarter, according to StatsCan, which was largely thanks to the resurgence of COVID-19 and the shutdown of non-essential retail businesses.

The report indicates that Canada's overall commercial rent market remained uncertain at the beginning of 2021 thanks to renewed lockdowns in many regions, including Toronto, but the rollout of vaccines for the general public is expected to help rents stabilize later this year.

"Retail e-commerce sales rose by just over two-thirds (+70.5%) in 2020, accelerating the shift from brick-and-mortar stores to industrial buildings and warehouses during the pandemic," reads the report. 

"Going forward, the retail building market will remain challenging for landlords and tenants alike, as they negotiate shorter lease terms or sales-based lease agreements to adapt to the new business reality."