Toronto’s retail market is in the middle of a transformation that’s rewriting the rules for where people shop, what they’re spending on, and how landlords are monetising their properties.
Jonathon Gray sees it happening in real time. As Director at Marcus & Millichap and a newly named RETHINK Retail Top Retail Expert for 2026, Gray’s portfolio tells the story: Firehouse Subs pushing into the PATH, Oxygen Yoga opening five Toronto locations next year, AIRE Ancient Baths having recently opened at 510A Front Street West after four years of development.
The shifts are everywhere—food court tenants staying open late to function as delivery hubs, office tower lobbies doubling as coffee shops, neighbourhoods like Queen and Parliament preparing for 700,000 square feet of new development. And underneath it all, a consumer spending pattern that’s up 204% in arts and entertainment since 2018, according to RBC data.
“Consumers continue to vote with their wallets,” Gray says.
The Underground Transformation
Toronto’s 30-kilometre underground retail network spent years serving a simple purpose: banks, medical offices, food courts. Monday to Friday, 8 a.m. to 4 p.m., everything closed. That’s changing.
“Food court tenants traditionally would only be open mid-morning—with the exception of a few breakfast players—till early afternoon,” Gray says. “Now they’re staying open later to take advantage of mobile delivery and acting as a hub. That’s an aspect that didn’t exist pre-COVID.”
The PATH is also getting fitness. Oxygen Yoga is opening in Scotia Plaza in Q1 2026. Paint Cabin just opened its largest location at Scotia Plaza in November. Crunch Fitness is expanding at 20 King St W. Playwell Golf is opening at First Canadian Place.
Gray represents Oxygen Yoga as it expands across the city. “It’s a concept that started in Vancouver, but it’s truly becoming a global brand marching outside of North America at a pretty fast pace,” he says. Early 2026 openings include the Annex on DuPont, Canary District on Front Street, along with Scotia Plaza.
The question is whether the PATH can become a true seven-day destination, not just a weekday service corridor. “Hours will remain somewhat consistent for the majority of shops,” Gray says. But he sees gaps. Harry Rosen just committed to a new downtown experience. “There are occasions where you need to run out and grab something—clothing for an event, or just in between lunch or in the evenings. Gifts for co-workers, for family, quick shops during the working day—that’s still a void that could be fulfilled in the PATH.”
Above ground, food and beverage still dominates leasing activity, but the landscape is evolving fast. “It’s challenging to find a lunch under $20 in the core,” Gray says. Despite that, national QSRs are doubling down. McDonald’s, Tim Hortons, Taco Bell—all extremely active. The sandwich category keeps growing with Firehouse Subs, Jimmy John’s, and Jersey Mike’s expanding. Gray’s firm represents Firehouse Subs as it enters the financial core.
But not every category has room. “Mexican food remains quite saturated,” Gray says. “Some of those brands are starting to face challenges, just given how competitive the space has become.”
The real action is in full-service dining. “Sit-down restaurants continue to see strong demand in the core,” Gray says. “Landlords are actively seeking them out to monetise-amenitize office buildings and residential towers.”
That extends to lobby spaces. Dineen Coffee Co. opened at 200 King Street West in 2025. “200 King has done a great job with that integration,” Gray says. At 121 King Street, the building went further. “On the top floor, there’s a golf simulator, meeting rooms you can book, and a full lounge,” Gray says. “I’ve never actually met in any of the company offices there—it’s always upstairs in the tenant lounge.”
Where the Growth Is Happening
Ask Gray about hot neighbourhoods and you won’t hear Queen West or Ossington. Those are established. The story is what’s happening in places that weren’t on anyone’s radar 24 months ago.
DuPont and Geary corridor is seeing mid-rise development and a shift in tenant mix. “Geary continues its transformation with strong activity,” Gray says. “SANA wellness concept opened there recently, and I believe it’s going to fundamentally reshape the character of that street beyond restaurants.” Gray was part of the team that represented AIRE Ancient Baths, which opened in December at 510A Front Street West. “It’s a genuinely dramatic wellness experience,” he says.
Queen and Parliament and Downtown East is a major development story. The Toronto Public Library invested $30 million in the southwest corner. Tricon’s ROQ City development is accelerating. “There are 14 developments under construction within a 1-km radius of ROQ City development that will deliver 6,500 new residential units with an additional 18,000+ units in pre-construction phase,” Gray says. “That’s significant growth for any neighbourhood. Yonge & Eglinton is also seeing significant intensification.”
The Danforth is evolving. “It’s becoming a young family neighbourhood with strong operator interest,” Gray says. “We’re seeing substantial turnover on the street with new restaurants moving in, which signals healthy underlying demand.”
West Queen West is facing challenges. “West Queen Street West has had a tough time competing with the influx of tenants to Ossington,” Gray says. “The focus has shifted—it’s become more of an amenity and service base for the community rather than the restaurant hub it used to be. That dining energy has consolidated into Ossington.” Dundas West continues benefiting from Ossington’s overflow.
“East Harbour and the Portlands are transforming with massive mixed-use development. Queens Quay East had World Swing and Ethos Climbing Gym. Canary District needs more density but is making progress. Eglinton will become more visible as the LRT comes online.”
RBC consumer credit data shows spending on arts and entertainment up 204% compared to 2018. That’s not slowing down—it’s expected to keep rising into 2026. “You’re going to see a lot more large-format experiential concepts continue to grow, be it arcade-focused, golf-focused,” Gray says. “I think that will continue to fill in the market. And then you’ll see it mature beyond that in terms of the space becoming more saturated, more options. And then right-sizing the market in terms of how many golf simulators we can support.”
“Demand right now? You look in the winter, they’re all full,” Gray says.
Physical retail is also experiencing renewed investment as e-commerce growth moderates. “People are making more bets on physical retail, and online-native brands are more focused on entering the retail space,” Gray says. The most compelling concepts blend physical and digital. Yorkdale Mall’s Santa experience had visitors “sent up to the North Pole” before meeting Santa. “That’s an interesting example, but I think that’s indicative of how brands and placemaking are getting more creative to create that physical and digital intersection for unique experiences,” Gray says.
Cannabis is also making a methodical return. “Outside the core, you’ll see more cannabis come back into the forefront,” Gray says. “The national groups are making another push, but much more methodical in their approach this time.”
The 2026 Outlook
Gray’s predictions are grounded in active deal flow and tenant conversations. “Strong demand and tight inventory will continue,” he says. Small-format retail will see significant demand. Value-conscious consumers will define 2026, though established brands delivering value will keep expanding.
Planning horizons have compressed. “It’s client-dependent, but there’s a short-to-medium-term focus,” Gray says. “The long-term macro-environment is still quite uncertain. With how fast market dynamics have shifted, it’s really hard to predict beyond that. A lot of groups are betting on what’s in the shorter horizon over the next few years.”
AI and retail media will play increasingly important roles, alongside more experiential opportunities driven by landlords, brands, and retailers.
The through-line? Consumers are voting with their wallets—for experiences, food, and wellness over traditional retail. The landlords and tenants who recognise that shift are positioning themselves for what’s next.
Jonathon Gray is Sales Representative and Director at Marcus & Millichap, specialising in retail tenant and landlord representation. He was named a RETHINK Retail Top Retail Expert in 2026.
Dustin Fuhs is the founder and Editor-in-Chief of 6ix Retail, Toronto’s premier source for retail and hospitality industry news. As the former Editor-in-Chief of Retail Insider, Canada’s most-read retail trade publication, Dustin brings over two decades of expertise spanning retail, marketing, entertainment and hospitality sectors. His experience includes leadership roles with industry giants such as The Walt Disney Company, The Hockey Hall of Fame, Starbucks and Blockbuster.
Recognized as a RETHINK Retail Top Retail Expert in 2024 and 2025, Dustin delivers insider perspectives on Toronto’s evolving retail landscape, from emerging brands to established players reshaping the city’s commercial districts.