Building Where the Land Has Run Out

More than 3.5 million SF of new-generation space is available, under construction or proposed across Toronto’s Central Markets, but it is concentrated in a handful of rare sites

The Toronto Central Markets (Toronto, North York, Etobicoke, Scarborough, East York and York) are the most supply-constrained industrial region in the GTA. There are almost no greenfield sites left, so new modern space can only come from redeveloping existing sites. Over the next seven weeks, we’ll look at what’s being built, what’s planned, and what it means for investors, developers, landlords and tenants. We’ll start with the whole region, then go submarket by submarket, and finish with a feature on one of our own mandates.

Where the Market Stand

• A large, old base: Q2 2026 closed with 225.2 million SF of inventory across 4,340 buildings. Much of that stock predates modern logistics specifications.
• Softer, but still tight: Availability edged up to 4.0% from 3.9% in Q1, which is still below the GTA-wide figure of 4.9%.
• Rents: The weighted average asking net rent slipped to $14.75 PSF from $15.05 PSF, with additional rent at $4.43 PSF.
• Occupier demand: Leasing reached 1.17 million SF in the quarter and 2.45 million SF for the first half.
• Capital is back: About $333 million traded across sixteen deals over 20,000 SF. The largest was GWL Realty Advisors’ $112.35 million purchase of 2750 Morningside Avenue at a 5.0% cap rate.

The GTA Central Development Pipeline

What the Pipeline tells us….

• Scarborough is building now. Four projects totalling nearly 1.9 million SF are under construction, and three of them sit along the Steeles Avenue East corridor. It is the only Central submarket adding speculative supply at scale.
• Etobicoke proves the demand. The Birmingham is now fully leased. That leaves 541 Kipling as the only completed new-generation building available in the Central Markets.
• Tenant commitments come first everywhere else. All three proposed projects are design-build or build-to-spec, which means shovels move only once a tenant commits. The wider market is heading the same way;  It is estimated that design-build account for about a third of the GTA’s expected 2026 new supply.
• 40′ clear is the new standard. Six of the eight projects offer 40′ clear heights. Much of the existing Central inventory is below 24′.
• Large blocks are very rare. Only two proposed sites in the Central Markets can deliver about 465,000 SF: 1100 Caledonia Road and 260 Eighth Street.

The rent data shows why modern product is worth building. Since modern high bay facilities achieved the highest net rental rate, it is clear that redevelopment creates value

What’s Driving Infill Demand 

• Labour access: Central sites sit next to the region’s densest labour pool. Transit improvements such as Line 5 Eglinton and the Finch West LRT widen that advantage.
• Development charge advantage: Industrial development in the City of Toronto pays no development charges. Charges are limited to education levies totalling about $1.17 PSF, well below what comparable sites pay in the surrounding 905 municipalities.
• Last-mile logistics: Distribution close to the consumer reduces delivery times and transportation costs.
• Obsolescence: Low-clear, poorly configured buildings on large lots are prime candidates for redevelopment.
• Non-traditional users: Utilities, transit agencies and municipal operators need large, central, secure sites. Almost no existing buildings meet those needs.

What it Means For You

• For Investors: Repricing has opened an entry point, and recent transactions on new product sets a new institutional benchmark. Institutional names like Oxford,  W. P. Carey, Pure Industrial and Hopewell committing capital to Central infill supports the long-term thesis.
• For Developers: The Birmingham’s lease-up shows new product in the core gets absorbed. With development charges limited to about $1.17 PSF in education levies, Toronto infill avoids a major cost that projects in the 905 carry. Pre-commitment is now the norm, and land values remain below peak, which rewards patient capital.
• For Landlords: Owners of older buildings will be competing against 36′ to 40′ new-builds. Now is the time to assess whether your land is worth more than your building.
• For Tenants: Only one completed new-generation building is available in the core today. Delivery timelines differ meaningfully between proposed projects, so occupiers with significant requirements should start planning early.

 Coming Up 

Next week we visit Scarborough, where the Steeles Avenue East corridor is delivering the Central Markets’ largest wave of new supply. The series closes with a feature on 1100 Caledonia Road ~ : 465,000 sf , 40′ clear, on 22.40 acres in the heart of the city.

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

Until next week…