Retail REITs vs Industrial REITs in Canada for 2026
A Canadian income investor choosing between the two biggest REIT property types in 2026 is really choosing between two different numbers. Retail REITs are where the occupancy and the yield are. Industrial REITs are where the growth is. Both of those statements come out of the same quarter’s results, which is what makes this a genuine decision rather than a ranking exercise.
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This piece compares the two property types on what they actually own, what the second-quarter 2026 results said about each, the honest negatives on both sides, what the First Capital takeover implies about retail asset values, and how the distributions are taxed. It closes with criteria for deciding, not a verdict. If what you want instead is a ranked shortlist of individual names, that is the job of our Canadian REIT stocks pillar, which this comparison deliberately does not duplicate.
All market figures are data as of September 2, 2026. All results are for the second quarter of 2026, the quarter ended June 30, 2026.
What each property type actually owns
“Retail REIT” covers more ground than the label suggests. Among the Canadian names, CT REIT runs a net-lease, single-tenant model anchored by Canadian Tire, with 380 properties and 32 million square feet of gross leasable area. Crombie is grocery-anchored through its relationship with Empire and Sobeys. Primaris is the enclosed-mall owner in the group. RioCan’s chief executive Jonathan Gitlin describes the portfolio as “necessity-based retail” in the company’s own results release. Choice Properties is in the middle of acquiring roughly $5.0 billion of necessity-based neighbourhood shopping centres from First Capital. SmartCentres and Plaza Retail round out the listed set.
Industrial is narrower and more international. Granite describes itself as owning “logistics, warehouse and industrial properties in North America and Europe”: 145 investment properties, about 61.5 million square feet of gross leasable area, carried at a fair value of $9.6 billion as at June 30, 2026, with a weighted average lease term of 5.1 years. Dream Industrial holds 348 industrial assets across 565 buildings, about 75.7 million square feet, spread across Canada, Europe and the United States.
That geographic difference matters before any of the numbers do. Buying Canadian retail REITs is a bet on Canadian consumer real estate. Buying the two large Canadian industrial REITs is a bet on logistics property in multiple currencies, reported back to you in Canadian dollars.
Retail’s story is occupancy, and it is a strong one
The retail occupancy numbers in the second quarter were the best part of the sector’s case.
RioCan reported that “retail committed occupancy reached a record high for RioCan of 98.8%, with retail in-place occupancy of 98.0%.” CT REIT’s portfolio occupancy on a committed basis was 99.5% at June 30, 2026. SmartCentres reported 98.1% on both an in-place and committed basis. Crombie’s chief executive Mark Holly said “committed occupancy remained near all-time highs at 97.5%,” with economic occupancy at 96.6%.
Full buildings give landlords leverage on renewals, and the leasing spreads show it. RioCan’s blended leasing spread was 23.1% in the quarter, made up of a 40.8% spread on new leasing and 20.7% on renewals. SmartCentres reported rent growth of 12.0% excluding anchors, or 6.6% including them, on roughly 247,000 square feet leased in the quarter. Those are the numbers behind RioCan raising its 2026 Commercial same property NOI guidance to a range of 4.0% to 4.5%, up from the original 3.5% to 4.0%, in its second-quarter 2026 results release. RioCan’s Core FFO per unit was $0.40 diluted, up 5.3%, and Commercial same property NOI grew 4.3%.
Primaris is the exception on occupancy and the reason is worth knowing. In-place occupancy was 86.6%, down from 88.8%, with committed occupancy at 91.1%, up from 90.5%. The gap is the former HBC space: Primaris reported that 84% of it, or 881,400 square feet, was leased or in advanced negotiations, with 58%, or 608,500 square feet, under long-term leases representing about $14.9 million of expected annual rental revenue. That is a vacancy being refilled in public view rather than a portfolio in decline, and Primaris reaffirmed 2026 guidance of $1.85 to $1.90 FFO per unit, 86% to 88% occupancy and same-property NOI growth of 1.0% to 3.0%.
Industrial’s story is growth, and the gap is not close
Set the same-property growth figures side by side and the industrial advantage is obvious.
Dream Industrial reported comparative properties net operating income on a constant currency basis up 10.3% to $103.7 million, with diluted FFO per unit of $0.28, a 7.8% increase. Chief executive Alexander Sannikov said the trust “delivered another consecutive quarter of strong results, with over 10% comparative properties NOI growth and 8% FFO per Unit growth.” Year to date through July 31, 2026, Dream Industrial leased 3.3 million square feet at a weighted average rental rate spread of 21.1% over prior or expiring rents. The trust also announced a 2.5% distribution increase to an annualized rate of approximately $0.7175 per unit starting with the September 15, 2026 distribution, which Sannikov called “our first distribution increase since 2013.” The full detail is in the Dream Industrial Q2 2026 results release.
Granite reported FFO of $95.2 million, or $1.56 per unit, against $85.4 million and $1.39 a year earlier, which works out to per-unit growth of 12.2%. AFFO per unit was $1.26 versus $1.23. Constant currency same property NOI on a cash basis rose 8.3%. In-place occupancy was 98.0% at June 30, 2026, an increase of 220 basis points year over year, with committed occupancy of 98.1% as at August 5, 2026. In its second-quarter 2026 results, Granite said it was “updating its 2026 guidance and narrowing the ranges,” lifting the bottom of its FFO per unit range to $6.30 to $6.40 from $6.25 to $6.40, setting AFFO per unit at $5.45 to $5.55 and tightening constant currency same property NOI growth to 6.0% to 6.5% from 5.5% to 6.5%. Note the wording: narrowed, not raised.
Retail’s comparable growth figures for the quarter ran from Primaris at 0.5% same-property cash NOI, or 1.1% excluding prior-year tax recoveries, to RioCan at 4.3%. Industrial’s ran from 8.3% to 10.3%. That is the single cleanest difference between the two property types this quarter.
The honest negatives on both sides
Retail’s problem is that occupancy is won and growth is not automatic. Crombie is the clearest illustration: committed occupancy up 30 basis points to 97.5%, property revenue up 1.9% to $126.2 million, commercial same-asset cash NOI up 3.2%, and yet FFO per unit of $0.33, down 2.9% from $0.34. Crombie’s second-quarter 2026 release attributes that decrease “primarily due to reduced lease termination income and increased interest expense,” with AFFO per unit flat at $0.30. SmartCentres held FFO per unit unchanged at $0.58 with same-property NOI up 2.6%, or 4.4% excluding anchors, and Primaris grew FFO per unit 1.3% to $0.451 while AFFO per unit fell 8.7% to $0.314. Strong buildings, modest per-unit progress.
SmartCentres also posted a net loss of $147.0 million against net income of $109.2 million a year earlier. That is an IFRS fair-value swing on property carrying values rather than a change in what the portfolio collected, which is why FFO, the cash-based measure, was flat in the same quarter. The same accounting works in the other direction elsewhere: CT REIT’s net income of $126.2 million was up $23.2 million, which the company’s second-quarter 2026 results release attributes primarily to increases in the fair value adjustment on investment properties and higher revenues from the property portfolio, alongside same property NOI of $119.7 million, up 2.5%. Judge either REIT on FFO and same-property NOI, not on net income.
Industrial has two negatives of its own. Dream Industrial’s in-place occupancy edged up to 94.2% from 94.1%, but in-place and committed occupancy fell to 95.0% from 96.1% a year earlier. It is a small move, and it points the opposite way from retail’s. Our read is that industrial is digesting some new supply while retail has very little arriving.
The second is concentration. Granite disclosed that Magna accounts for 26% of annualized revenue. A quarter of the rent roll from one tenant is a real risk to size, even with a strong tenant and a 5.1-year weighted average lease term. Retail has its own version of this: CT REIT is anchored by Canadian Tire, Crombie by Empire and Sobeys, and Choice Properties by its parent relationship. Single-anchor models trade stability for dependence, and which side of that trade you value is a genuine preference rather than a right answer.
What the First Capital takeover says about retail values
The strongest external evidence in retail’s column is not a quarterly number. It is a cheque.
According to First Capital’s April 16, 2026 press release, KingSett Capital and Choice Properties agreed to acquire First Capital REIT in a unit-and-cash transaction valued at approximately $9.4 billion including the assumption of certain debt. Unitholders were to receive $19.24 in cash plus 0.3186 of a Choice Properties unit, for total value of $24.40 per unit based on Choice’s April 15, 2026 close, a mix of roughly 79% cash and 21% units. The consideration represented a 17% premium to the 20-day volume-weighted average price, a 12% premium to the closing price, and an 8% premium to net asset value of $22.57 per unit. Choice takes about $5.0 billion of necessity-based neighbourhood shopping centres and KingSett takes about $4.4 billion of assets. Choice chief executive Rael Diamond called it “an exciting and transformative transaction that will solidify Choice Properties as Canada’s leading REIT.” The deal has been approved by unitholders, has received court approval, and per subsequent Canada Newswire releases is expected to close in the second half of 2026.
The point for a comparison like this one is the premium to NAV. Canada’s largest REIT and a large private capital manager together paid above the accounting value of a retail portfolio, in cash, at scale. Public retail REIT unit prices have been arguing one thing about what these buildings are worth, and this transaction argued another. It does not make any individual retail REIT a buy, and First Capital’s own units are not a way to participate: in a takeover they trade around the deal terms.
Head to head
| Retail REITs | Industrial REITs | |
|---|---|---|
| Names covered | RioCan, SmartCentres, CT REIT, Choice Properties, Primaris, Crombie, Plaza Retail | Granite, Dream Industrial |
| Distribution yield range | about 4.19% to 6.79% | about 4.1% to 5.37% |
| Occupancy, latest reported | committed 97.5% (Crombie) to 99.5% (CT REIT); Primaris in-place 86.6%, committed 91.1% | Granite in-place 98.0%, committed 98.1% at Aug 5; Dream Industrial in-place 94.2%, in-place and committed 95.0% |
| Q2 2026 same-property NOI | +0.5% (Primaris) to +4.3% (RioCan) | +8.3% (Granite, constant currency cash) and +10.3% (Dream Industrial CP NOI, constant currency) |
| Q2 2026 FFO per unit | -2.9% (Crombie) to +5.3% (RioCan); SmartCentres flat, Primaris +1.3% | +7.8% (Dream Industrial), +12.2% (Granite, computed) |
| Leasing spreads | RioCan blended 23.1%; SmartCentres rent growth 12.0% ex-anchors | Dream Industrial 21.1% weighted average, YTD to July 31, 2026 |
| Distribution news | no rate changes in these Q2 releases | Dream Industrial +2.5% from the Sept 15, 2026 distribution; Granite unchanged |
| Occupancy direction | at or near highs across the group | Granite in-place +220 bps; Dream Industrial committed down to 95.0% from 96.1% |
| Concentration | single-anchor models at CT REIT, Crombie, Choice | Granite: Magna at 26% of annualized revenue |
Sources: each company’s second-quarter 2026 results release for the quarter ended June 30, 2026, as linked above; Primaris release of July 29, 2026 and SmartCentres release of August 6, 2026. Yields computed from unit prices and current annualized distribution rates, data as of September 2, 2026. Granite’s yield is calculated from distributions paid at the second-quarter rate, since no rate change was announced.
How the distributions are taxed, and why a TFSA changes the question
REIT distributions are not the same animal as a Canadian dividend. They are largely not eligible dividends: the typical distribution is a mix of other income and return of capital, so it does not carry the dividend tax credit that an eligible dividend from a bank or a pipeline does. In a taxable account, that difference is worth modelling before you compare a 5.7% REIT yield to a 4.5% dividend yield as though they were the same money.
Inside a TFSA, the tax character stops mattering, which is why REITs are a common holding there. If that is where you are shopping, our guide to the best Canadian stocks for a TFSA covers how to think about the account itself. And if the underlying goal is income rather than real estate specifically, the wider field of Canadian dividend stocks is the fairer comparison set: REITs are one way to buy yield, not the only one.
Both property types are also rate-sensitive as borrowers, and Crombie’s quarter is the proof: increased interest expense was one of the two reasons its FFO per unit fell despite better occupancy and better NOI. Where policy rates sit is therefore an input on both sides of this comparison, and our coverage of the Bank of Canada’s September 2026 rate decision sets out where that stands now.
How to decide
Four criteria do most of the work here.
Yield today versus growth of the payout. Retail yields run from about 4.2% at Primaris to about 6.8% at SmartCentres. Industrial runs from about 4.1% at Granite to about 5.4% at Dream Industrial. If you need the income now, retail generally pays more today. If you want the distribution itself to grow, industrial is the side that just raised, and Dream Industrial’s own framing of that raise as its first since 2013 tells you how rare the event is.
Where each sector sits in its supply cycle. Retail occupancy is at or near highs across the group with pricing power showing up in leasing spreads. Industrial is producing much better NOI growth, but Dream Industrial’s committed occupancy slipped year over year. Ask which risk you would rather carry: slow growth from full buildings, or fast growth with a little more vacancy creeping in.
Tenant concentration. Single-anchor models at CT REIT, Crombie and Choice Properties, and Magna at 26% of Granite’s annualized revenue, are the same structural question in different clothes. Concentration is stability until it is dependence.
What the private market is saying. The First Capital transaction cleared at a premium to NAV in the retail column. No comparable transaction appears on the industrial side in the results reviewed here.
None of that produces a winner. A reasonable investor who needs income today lands on retail. A reasonable investor with a decade of runway who wants the payout to compound lands on industrial. A third leans on both and lets the property types offset each other, which is what the two lists exist for.
Where to buy Canadian REITs
Every REIT discussed here trades as units on the TSX, so acting on any of it requires a brokerage account. Questrade offers $0 commissions on Canadian and US-listed stocks and ETFs. Open a Questrade account.
Frequently asked questions
What are the main retail REITs in Canada? The listed Canadian retail REITs covered here are RioCan (REI.UN), SmartCentres (SRU.UN), CT REIT (CRT.UN), Choice Properties (CHP.UN), Primaris (PMZ.UN), Crombie (CRR.UN) and Plaza Retail (PLZ.UN). They are not interchangeable: CT REIT is a net-lease single-tenant portfolio anchored by Canadian Tire, Crombie is grocery-anchored through Empire and Sobeys, and Primaris owns enclosed malls. First Capital is being taken private by KingSett Capital and Choice Properties in a transaction expected to close in the second half of 2026. For our ranked view of individual names, see our roundup of the best Canadian REIT stocks for 2026.
Do retail REITs pay more than industrial REITs in Canada? On current rates, generally yes. Retail yields in this group run from about 4.2% at Primaris to about 6.8% at SmartCentres, while the two industrial names run from about 4.1% at Granite to about 5.4% at Dream Industrial, data as of September 2, 2026. The trade is that industrial produced materially faster same-property NOI and FFO per unit growth in the second quarter of 2026.
Are retail REITs still growing, or just fully leased? Both are true at once, and that is the honest answer. Occupancy across the retail group sits between 97.5% and 99.5% on a committed basis, excluding Primaris, and RioCan’s blended leasing spread of 23.1% shows genuine pricing power on renewals. But per-unit results were modest: Crombie’s FFO per unit fell 2.9%, SmartCentres held flat at $0.58, and Primaris grew 1.3% while AFFO per unit dropped 8.7%. Full buildings did not translate straight into per-unit growth this quarter, mainly because of interest costs and lower lease termination income.
Should REITs go in a TFSA or a taxable account? That depends on your own tax situation and is worth confirming with an accountant, but the structural point is that REIT distributions are largely not eligible dividends, so they do not receive the dividend tax credit. Inside a TFSA that distinction disappears, which is why REIT units are a frequent choice in that account.
The bottom line
The second quarter of 2026 gave Canadian income investors an unusually clean split. Retail delivered the occupancy, the pricing power, the higher yields and an external buyer paying a premium to net asset value for the assets. Industrial delivered the growth, roughly double retail’s same-property NOI improvement, plus the only distribution increase in the group. Neither of those facts cancels the other. Decide which of the two you are actually buying, and let the numbers above tell you whether the version you have chosen is doing its job each quarter.
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