[chrismaeda]

Property tax laws cause the empty store fronts.

In Ontario (as with most places in North America), commercial property is assessed on its highest and best use (ie potential use), not its current use. So if a parcel has a low-rise building with some bookstores and cafes, it will be assessed at the same value as the high-rise condo tower next door.

This "highest and best" assessment rule means that in a rising market, the landlord must raise rents to cover rising property taxes. In addition, a landlord may apply for a property tax rebate if a commercial or industrial property is vacant.

So there is zero incentive for landlords to accept below-market rents for small businesses: if the property is vacant, they don't pay property taxes. If the property is rented at below-market rates, they lose money because they still have to pay property taxes at full-market rates.

Even if the small business owner also owns the building, the rising property taxes may make the small business uneconomic and force them to move.