Canadian CAP Rates & Capital Markets Report Q4 2025

February 13th, 2026

Canada’s commercial investment market showed renewed momentum through 2025, with industrial and multifamily leading activity and cap rates beginning to stabilize or firm in several asset classes, including Greater Toronto Area industrial. Below is an overview with emphasis on the key capital market’s themes and industrial metrics you can act on today.

Macro conditions: late‑cycle, but not late to act

Interest rates remained volatile in 2025, with the Canadian bond yield and U.S. 10‑year still elevated versus pre‑pandemic norms yet trending toward a new equilibrium rather than further shock. Spreads between prime assets and weaker product widened, making quality, covenant, and lease term more important drivers of pricing than at any point in the last decade.

The capital markets recovery is underway but uneven across product types and metros, with private buyers and alternative capital stepping in where institutional groups remain selective. Lenders are focused on debt service coverage and sponsor strength; leverage is available, but underwriting is tighter, and proceeds are lower, especially for tertiary locations or functionally obsolete assets.

For GTA investors, this environment rewards disciplined, data‑driven decision‑making sharpening underwritten rents and expenses, stress‑testing exit yields, and structuring transactions to reflect today’s capital costs rather than yesterday’s.

National sales volumes: industrial and multifamily carry the load

Across Canada, total commercial investment volume in 2025 increased modestly versus 2024, signaling stabilization after two years of repricing. On an asset‑class basis, industrial and multifamily together represented a substantial share of dollar volume, reflecting investors’ preference for durable income and structural demand drivers.

Retail investment was steady, supported by grocery‑anchored centers, power centers, and well‑located street retail, while office remained bifurcated between best‑in‑class and everything else. Land sales were selective, with trades concentrated in infill industrial and residential sites where developers could underwrite clear exit strategies.

Overall Canadian Sales Volume by Asset Class, 2024–2025

Key implications for GTA capital allocators:

• Industrial: Still the “core” institutional product; liquidity is deeper for modern, well‑leased assets in established nodes.

• Multifamily: Benefitting from immigration and supply constraints; cap rates remain sharp for newer stock despite higher debt costs.

• Retail: Niche opportunities where tenant mix and location support NOI growth; cap rates offer a premium to industrial and multifamily.

• Office: Flight to quality; secondary assets require realistic pricing and a value‑add business plan to clear the market.


Toronto: Sales Volume By Asset Class

Within the national picture, Toronto remains a dominant market for investment activity, especially in industrial, multifamily, and retail. In 2025, Toronto ranked near the top of Canadian metros for total sales volume, with industrial and multifamily again acting as the primary capital magnets.

Toronto – 2025 Sales Volume by Asset Type

Observations for the GTA:

• Industrial: Strong share of total Toronto dollar volume, driven by trades of modern distribution facilities and select user acquisitions.

• Multifamily: Consistent transaction flow in both high‑rise and low‑rise product; investors remain focused on transit‑oriented and well‑amenitized buildings.

• Retail: Activity concentrated in grocery‑anchored and daily‑needs centers; non‑anchored strip deals are more yield‑driven and pricing‑sensitive.

• Office & Land: More episodic, with lenders and buyers carefully underwriting lease‑up risk, conversion potential, or redevelopment value.


For owners, this means there is real liquidity for well‑positioned industrial and multifamily assets, while other property types can still transact where pricing acknowledges current leasing and capital‑cost realities.

Industrial: sales volumes and cap rates

The industrial sector continued to rank among the most sought‑after asset classes nationally, with investors attracted by resilient tenant demand, limited new supply in infill locations, and long‑term e‑commerce and logistics fundamentals. In 2025, industrial investment volume reached into the double‑digit billions nationally, even as pricing adjusted to higher interest rates.

Vacancy in key markets, including the Greater Golden Horseshoe, remained near historically low levels, supporting rent growth—albeit at a slower pace than the 2021–2022 surge. User sales and design‑build projects were an important component of activity, particularly where existing stock could not accommodate specialized requirements.

Overall Industrial Sales Volumes by Major Market, 2025

From a cap‑rate perspective, industrial yields expanded from their 2022 trough but showed signs of stabilizing through 2024–2025. Historical national trends illustrate a compression phase from 2017 to 2022, followed by a re‑rating upward as interest rates rose, and a gradual flattening thereafter.

Historical Industrial Cap Rates – Canada (Class A & Class B)

In 2025, typical indicative ranges by class were approximately as follows:

Industrial Cap Rates – Major Markets (Class A & B, Q4 2025)

Cap rate summary: where we ended Q4 2025

The Q4 2025 national cap‑rate survey highlights how pricing has reset differently across asset classes and markets. Industrial and multifamily remain at the tight end of the yield spectrum, while office, certain retail formats, and hotels offer a yield premium in exchange for higher risk.

National Cap Rate – Historical Comparison by Asset Type

Q4 2025 Survey – Selected Ranges (Canada)

Conclusion

While each property must be underwritten on its own merits, three broad themes stand out for our GTA commercial real estate community:

Risk is now fully priced. The rapid outward move in cap rates appears largely behind us in most sectors; today’s opportunity lies in transacting at yields that better reflect long‑run borrowing costs and NOI growth.

Quality and functionality dominate. Buildings with strong locations, modern specs, and compelling tenant stories continue to clear at comparatively sharper yields and attract the widest buyer pools.

Execution matters more than ever. From preparing data rooms and lease abstracts, to structuring financing and timing market outreach, professional execution can mean the difference between a marginal bid and a successful closing.

What this means for GTA owners, investors, and occupiers
For industrial and other commercial owners in the Greater Toronto Area, 2026 is shaping up as a year of selective opportunity rather than broad‑based exuberance. Vendors who align expectations with today’s cap‑rate ranges and buyer underwriting can unlock liquidity, particularly in well‑located industrial, multifamily, and daily‑needs retail.

Occupiers contemplating a purchase, sale‑leaseback, or design‑build can use this moment to lock in long‑term cost certainty while capital markets remain disciplined but open for business.
And for investors sitting on the sidelines, the combination of stabilized pricing, modestly higher yields, and ongoing rental‑growth potential—especially in GTA industrial—presents a window to re‑enter the market with clearer visibility than we have had in several years.

For a confidential consultation or a complimentary opinion of value of your property please give us a call.

Until next week…

Goran Brelih and his team have been servicing Investors and Occupiers of Industrial properties in Toronto Central and Toronto North markets for the past 30 years.

Goran Brelih is an Executive Vice President for Cushman & Wakefield ULC in the Greater Toronto Area.

Over the past 30 years, he has been involved in the lease or sale of approximately 25.7 million square feet of industrial space, valued in excess of $1.6 billion dollars while averaging between 40 and 50 transactions per year and achieving the highest level of sales, from the President’s Round Table to Top Ten in GTA and the National Top Ten.

Specialties:
Industrial Real Estate Sales and Leasing, Investment Sales, Design-Build and Land Development

About Cushman & Wakefield ULC.
Cushman & Wakefield (NYSE: CWK) is a leading global real estate services firm that delivers exceptional value for real estate occupiers and owners. Cushman & Wakefield is among the largest real estate services firms with approximately 53,000 employees in 400 offices and 60 countries.

In 2020, the firm had revenue of $7.8 billion across core services of property, facilities and project management, leasing, capital markets, valuation and other services. To learn more, visit www.cushmanwakefield.com.

For more information on GTA Industrial Real Estate Market or to discuss how they can assist you with your real estate needs please contact Goran at 416-756-5456, email at goran.brelih@cushwake.com, or visit www.goranbrelih.com.

Connect with Me Here! – Goran Brelih’s Linkedin Profile: https://ca.linkedin.com/in/goranbrelih