My clubbing years are long past so this doesn't impact me. I don't think there's any one single cause: zoning restrictions, liquor licensing, high rents, gentrification, changes in club culture, etc., are all factors but none is key IMHO.
While in some ways it marks the end of an era, I don't think it's all that sad. It might seem that young queers don't have as many options for nightlife compared to many years ago but I think the opposite might be true, and that's part of the reason why there's no need for dance clubs in the village anymore. 25 years ago, clubs were one of the few spaces queers could openly socialize in. A fair number of the patrons were there not to dance to the latest tunes but simply because all their friends were there, or they wanted to meet new people or just hook up or whatever. I knew a few people back in the day who absolutely loathed dancing and club music, but they still went out to Boots/Chaps/Colby's/etc. with the goal of finding Mr. Right or Mr. Right Now. Today those people would have absolutely no need to be in a place they disliked just to find new faces.
Meanwhile, I enjoyed clubbing but I found the bland House and cheesy Eurodance played at gay clubs left much to be desired, and gave up in my early 20s because I just couldn't stand hearing the dance remix of Celine Dion's "Unison" for the six thousandth time. But back then, I just couldn't imagine going to a straight club which would've played music more to my liking. I wouldn't have felt safe at such a place, and certainly nobody I knew would've gone with me. I'm told a lot of that has changed now too; young queers who want to go clubbing just head with their friends for whatever place has the best DJ. They can be open and don't feel threatened, and they aren't going out to meet other gays at these places (that's what grindr is for), so there's no need to limit themselves to the village.
I don't know how true that is or if clubbing has simply gone out of style (seems unlikely to me, given that EDM is bigger than ever), but I'm glad that young homos have more options than I did. Back in my day, our social lives revolved around clubs, and the loss of one was usually a sad event. If the last club in the village shutting its doors is a total non-event for TO's queer youth, I can only think it's a sign of how things have changed for the better.