GTA Industrial Posts the Strongest First Half on Record

Halfway through 2026, the GTA industrial market has done something it has never done before. New leasing across the region reached 17.6 million square feet in the first six months of the year — the strongest first-half result ever recorded, surpassing the previous high-water mark of 16.3 msf set in H1 2021. It is more than double the 8.2 msf posted in H1 2024 and more than 50% ahead of the 11.4 msf recorded in H1 2025. This is not a one-quarter spike. The pace has been building steadily since Q3 2025, and it has held through an economic backdrop that most forecasters would have called hostile to expansion.

To put 17.6 msf in perspective: the first half of 2026 alone delivered roughly 87% of the entire leasing volume of calendar 2024 (20.2 msf) and about 65% of full-year 2025 (26.9 msf). If the second half simply matches the five-year average H2 of approximately 12.5 msf, 2026 closes near 30 msf — comfortably ahead of the 28.8 msf recorded in 2021, the strongest year in the market’s history.

The composition of that volume matters more than the headline. Activity is concentrated in one region and, within the leasing itself, in two very different kinds of buildings at opposite ends of the age spectrum. Understanding both concentrations is what turns a record number into an actionable read on the market.

Key Takeaways from H1 2026 — GTA Industrial Leasing

• New leasing across the GTA reached 17.6 msf in H1 2026, the strongest first half on record, up more than 50% from 11.4 msf in H1 2025 and more than double the 8.2 msf recorded in H1 2024;
• GTA West accounted for 10.2 msf, or 58.0% of all GTA activity — a record for the region and nearly double its H1 2025 volume — driving West vacancy to its lowest point in nearly two years;
• GTA Central new leasing rose 29.9% year-over-year to approximately 2.5 msf, and GTA North rose 27.9% to approximately 3.4 msf — both meaningful gains that have been overshadowed by the West’s headline numbers;
• Buildings completed within the past five years captured 7.0 msf, or 39.6% of total H1 2026 leasing, across just 55 transactions, at an average deal size of 127,000 sf — the largest of any vintage;
• Buildings over 40 years old recorded the second-highest volume at approximately 4.3 msf across 180 transactions — the highest transaction count of any vintage — at an average deal size of just 24,000 sf;
• The two extremes of the age curve together captured roughly 64% of all H1 2026 leasing, leaving the four middle vintages to split the remaining 6.3 msf; and
• The sustained pace of activity extends a trend that has been building since Q3 2025, underscoring the resilience of occupier demand amid an uncertain economic backdrop.

Reading the First Half: What the Numbers Actually Say

A Record Built Disproportionately in the West — GTA West delivered 10.2 msf of new leasing, representing 58.0% of total GTA activity and nearly double the volume recorded in the same period one year earlier. The region also eclipsed the pace set during 2022 and 2023, when space was being absorbed almost as quickly as it came to market. For context, GTA West carries roughly 47% of total GTA industrial inventory — so the region is capturing leasing demand at well above its structural weight. The Milton and Halton Hills speculative pipeline, which spent most of 2024 and 2025 as the market’s overhang, was the single largest contributor, and its absorption is what drove regional vacancy to its lowest point in nearly two years.

Central and North Are Participating, Not Just Watching — The West narrative has crowded out a genuinely important development: GTA Central new leasing rose 29.9% and GTA North rose 27.9% from H1 2025, implying roughly 1.9 msf and 2.7 msf respectively in the prior-year period. These are constrained, largely built-out markets with very little new supply to lease, which makes near-30% growth a demand story rather than a supply story. In the West, a tenant signing 300,000 sf is choosing among several new buildings. In Central and North, the same tenant is competing for one of a handful of functional options — and increasingly, that means older product, repositioned space, or a renewal at terms better than the alternative.

The Barbell: Two Vintages, Two Entirely Different Markets — The most useful finding in the data has nothing to do with geography. Newer projects are where the bigger deals are happening: buildings completed within the past five years captured 7.0 msf across only 55 transactions, at an average deal size of 127,000 sf, as large occupiers continue to favour modern facilities with higher clear heights, deeper trailer courts, and better operating efficiency. Older product is where the smaller deals are happening: buildings over 40 years old recorded roughly 4.3 msf across 180 transactions — more deals than any other vintage — at an average deal size of just 24,000 sf. That is 5.3 times more transactions at roughly one-fifth the size.

The Missing Middle — Between those two poles, the market thins out considerably. The four middle vintages — buildings between five and forty years old — split just 6.3 msf, about 36% of total activity, with the 5-to-10-year cohort registering only 742,000 sf. Some of that is simply a function of how much stock exists in each age band, but the pattern is consistent with what we see in the field: occupiers are either buying performance at the top of the market or buying cost at the bottom, and product that offers neither a modern specification nor a genuine price advantage is the hardest to lease. Owners of 1990s and 2000s-vintage buildings should be paying close attention to that gap.

What a Record Does Not Mean — One clarification worth making, because it comes up in nearly every client conversation. New leasing measures gross activity — the volume of space committed to. It is not net absorption, it does not net out space being vacated elsewhere, and it does not by itself mean rents are rising. A market can post record leasing while asking rents soften, and that is broadly what has been happening: the lease-up of the newest, highest-quoted inventory mechanically removes the top of the asking-rent distribution even as demand strengthens. The right read on H1 2026 is that demand is real and broad, and that the leverage window for tenants is narrowing — not that it has already closed.

What Lies Ahead: Market Outlook

1. Leasing Momentum — A second half at even the five-year average of 12.5 msf would produce the strongest calendar year in GTA industrial history. The more meaningful question is where the space comes from. With the West’s speculative overhang now substantially absorbed, the marginal 2027 requirement is more likely to be satisfied by a build-to-suit, a sublease, or a repositioned older asset than by an available new spec building.

2. Rental Rates — Expect asking rents to stabilize rather than continue correcting. The downward pressure of the past 24 months came primarily from standing new inventory competing for the same large occupiers; that inventory is now largely committed. What persists is sublease competition, which will keep capping achieved rents in the large-format segment through 2027. Landlords are competing on free rent, fixturing periods, and improvement allowances rather than headline rates — a distinction that materially changes effective rent math and one we model on every assignment.

3. The Small-Bay Story — One hundred and eighty transactions in 40-plus-year-old buildings at an average of 24,000 sf is the clearest signal in this report for anyone who owns Toronto Central or North infill product. Demand from smaller occupiers seeking functional space at a competitive cost is not just holding — it is the highest-frequency activity in the market. For owners, that argues for capital spent on the things small tenants actually pay for: power, functional shipping, clean office, and clear heights that permit racking.

4. Occupier Timing — Tenants with 2027 and 2028 expiries are at the point in the cycle where waiting starts to cost money. The current market still offers the best combination of choice and negotiating leverage seen in this cycle, but every quarter of 17-plus msf annualized leasing pace narrows it. Early renewal discussions, initiated 18 to 24 months ahead of expiry with a credible alternative in hand, remain the single highest-return exercise available to an occupier right now.

Conclusion

H1 2026 confirms that GTA industrial demand did not weaken — it relocated and it segmented. A record 17.6 msf of new leasing, concentrated 58% in the West and split at the vintage extremes between 127,000 sf logistics commitments and 24,000 sf small-bay deals, describes a market that is working, but working differently at each end.

For Investors: The transaction-count data argues for infill small-bay as much as for large-format logistics. One hundred and eighty deals in the oldest vintage cohort is liquidity, and liquidity in a supply-constrained submarket is what supports pricing.

For Landlords: Know which end of the barbell your asset sits on, and price accordingly. Buildings caught in the middle — too old to compete on specification, too expensive to compete on cost — are where vacancy periods extend. Retaining a good tenant through early renewal remains materially cheaper than re-tenanting.

For Owner-Occupiers: Purchase opportunities in the 20,000 to 50,000 sf range remain scarce and competitively bid. Buyers should be prepared to move quickly with clean conditions; financing pre-approval is a genuine differentiator in a multiple-offer environment.

For Developers: The absorption of the Milton and Halton Hills spec inventory materially de-risks the next development cycle. Sites with servicing in place and near-term approvals will be the most valuable commodity over the next eighteen months.

For Tenants: The window of maximum leverage is narrowing. If your lease expires in 2027 or 2028, the market conversation should be starting now, while inducement packages remain at cycle-best levels.

A significant volume of GTA industrial transactions continue to be negotiated off-market. To participate in these opportunities, connect with brokers who maintain long-standing relationships with property owners and occupiers across Toronto Central, Toronto North, and the broader GTA.

For a confidential consultation or a complimentary opinion of value of your property, please reach out to our team