I live in Leaside, a midtown Toronto neighbourhood, where starter homes go for $1 million or more. Two real estate companies vie for control of the retail spend here: RioCan Real Estate Investment Trust (TSX:REI.UN), the second-largest component in the index, and First Capital Realty Inc. (TSX:FCR), the index’s fourth-largest component. Together, they own at least a handful of properties in the area with more to come.

Although RioCan is the bigger of the two, I believe that First Capital is the better stock to buy.

Here’s why.

Both stocks are having a good year—RioCan and First Capital’s total returns year-to-date are 21.5% and 14.5%, respectively—so there’s no reason to be concerned if you’re a shareholder of either company. Compared to the TSX, you’ve done well. Longer term, say the past three or five years, First Capital’s seen better performance, beating RioCan by 100-200 basis points on an annual basis.

So, there’s a lot to like about both.

However, two things jump out for me about First Capital.

First, it’s chasing a very strong demographic that should allow it to continue to grow for many years to come. In 2009 the average household income within five kilometres of its 158 Canadian properties was $76,000; today it’s $96,200, 27% higher in just six years.

Not only that, but the average population within those five kilometres has grown 39% to 186,000. If the people in those neighbourhoods have 10% disposable income available, these two changes put almost $800 million in additional disposable income up for grabs.

Who benefits from this other than the retailers in those areas? First Capital does.

The second point I’d like to make about First Capital is a personal observation and much more subjective than my first point, so take it how you may.

First Capital tends to use grocery anchors for many of its properties, and Leaside is no exception. Here, we have a 48,000 square foot Longo’s that opened in Leaside Village in 2012, which anchors Leaside Village, a 116,000 square foot shopping centre.

The best part about the grocery store? It’s housed in a 97-year-old building that was once used to service steam locomotives. Until First Capital came along, the building was suffering from neglect. Today, Canadian Grocer magazine hails it as one of the 25 “must visit” supermarkets in the world.

A little bit north of Leaside Village is Local Public Eatery, a popular neighbourhood restaurant and bar frequented by Leaside residents; it recently celebrated its first anniversary. It was operated as a bank since the 1930s and was a CIBC branch until 2012 when the bank moved to Leaside Village. First Capital put a lot of work into the building, including adding a rooftop bar with a retractable roof.

What’s my point?

RioCan has a redevelopment underway not too far from Leaside at Yonge and Eglinton. It’s an uninspiring attempt to glam up one of the dullest corners in all of Toronto. Meanwhile, First Capital appears to actually pay attention to architectural design, respecting tradition where possible, while putting its own stamp on property redevelopment.

All of this is to say that if you want to own a piece of a real estate business that does a good job operationally, while also delivering an exceptional product, for my money, First Capital’s got RioCan beat–easily.

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Fool contributor Will Ashworth has no position in any stocks mentioned.