The chief executive of one of the country's most prominent commercial landlords says retail occupancy levels and rent rates are ticking up even as many storefronts across Canada sit empty.

Jonathan Gitlin of RioCan Real Estate Investment Trust says retail committed occupancy across his company's portfolio edged up to 98 per cent in the first quarter of the year from 97.4 per cent in the same period a year ago.

Rent per square for new leasing during the period ended March 31 was $28.57, down from $31.40 a year ago, but up from $24.10 in the prior quarter.

The first quarter’s rent per square foot was even higher than the average net rent per square foot of $21.13 that it saw across the rest of its portfolio, he added.

"These exceptional occupancy levels...continue to be driven by intense demand for RioCan's quality retail space, the sort of retail space that simply put is in a short supply," Gitlin said on a Thursday call with analysts.

His remarks came a day after his company revealed its net income for the first quarter amounted to $118 million, down from $160 million a year earlier.

The Toronto-based company attributed the drop to a fair value loss on investment properties which compared with a fair value gain a year earlier.

Revenue for the quarter reached $279.5 million, down from $294.0 million a year earlier, while fair value loss on investment properties was $17.4 million, down from a gain of $35.4 million during the same quarter in 2022.

Funds from operations totalled $131.3 million, or 44 cents per diluted unit, up from $130.6 million a year ago, or 42 cents per diluted unit.

RioCan's portfolio during the quarter was made up of 191 properties, including retail, office and residential space.

Much of it is comprised of "necessity-based retail anchor tenants," including 19.3 per cent grocery, pharmacy and liquor retailers, 14.1 per cent essential personal services and 10.7 per cent value retailers.

RioCan also had 13 spaces leased by Bed Bath & Beyond, the home goods retailer whose Canadian arm is winding down operations after going into bankruptcy protection in April.

There was "immediate and pronounced" demand for the locations, which made up less than one per cent of RioCan's revenue, Gitlin said.

Tenants expressed interest in all the properties almost immediately, but many chose to "take a more secure route" and "snapped up" 10 of the sites from the receiver who ran an auction to sell off Bed Bath & Beyond's assets.

"Retailers were unwilling to risk losing these sites," said Gitlin.

For his company, there was "the ability to fill the spaces with strong tenants, zero downtime and no outlay of capital."

As for the three sites that weren't secured at auction, Gitlin said his company recently finalized a lease for one and is the final stage of negotiations to secure tenants for the remaining two properties.

The tenants are "predictable," he said.

"They are very much strong existing incumbent users within the Canada retail landscape," he said.

"They covet that sort of 20,000 square-foot box and they won't be a surprise to you when we can announce them."

Earlier in the month, Putman Investments Inc., which bought Toys "R" Us' Canadian operations, HMV and Sunrise Records, announced it is opening a new home store retailer in 21 former Bed Bath & Beyond and BuyBuy Baby locations.

Canadian Tire Corp. Ltd. is also acquiring 10 former Bed Bath & Beyond leases to expand its Mark's and Pro Hockey Life banners.

This report by The Canadian Press was first published May 11, 2023.