For the past two years, anyone active in the Greater Toronto Area’s industrial market has felt the headwinds. Vacancy crept up, deal velocity slowed, and cautious tenants sat on the sidelines waiting for clarity on rates, trade policy, and economic direction. That period of restraint appears to be lifting.

According to Cushman & Wakefield’s latest Emerging Trends report (March 2026), the GTA industrial market recorded 26.9 million square feet (msf) of new leasing in 2025,  a significant recovery from the 12-year low of 20.2 msf seen in 2024. That figure ranks as the third strongest year on record, sitting just
6.5% below the 2021 peak of 28.9 msf.

What’s particularly interesting about the recovery is not just the volume,  it’s the character of it. Demand didn’t return evenly. Instead, it polarized sharply by size and building vintage, creating two very distinct stories within the same market.

That’s why, for this week’s newsletter, we are breaking down exactly what drove the 2025 leasing rebound, and what it means for property owners, tenants, and investors active in our market today.

A Tale of Two Markets: Size and Vintage Diverge 

The 2025 recovery was not a broad-based, rising tide. It was driven by concentrated demand at the two ends of the size spectrum — large-format big-box product and small-bay legacy space,  while mid-size transactions remained comparatively subdued.

Big Box: New Buildings, High Ceilings, High Demand

Large-format leasing made a remarkable comeback in 2025. Transactions over 200,000 sf jumped to 26 deals, up from just nine in 2024, nearly tripling year-over-year. Of that activity, 5.3 msf was absorbed in buildings constructed within the last five years, featuring 32’+ clear heights purpose-built for high-throughput logistics and distribution.

For landlords holding modern, well-located Class A product, this is a strong signal. After a quiet 2024, end-users with scale-driven requirements are back in the market and committing.

Small Bay: Legacy Buildings, Competitive Rents, Record Deals

At the other end of the spectrum, small-bay activity hit a six-year high. A total of 596 deals were completed in legacy buildings (15+ years old) totalling 17.3 msf — the most active year for this segment since 2019. Of those, 513 transactions (86.1%) were under 50,000 sf.

These older buildings, with average clear heights of just 19’, are attracting occupiers who are trading spec for cost-efficiency. With net rents in older product running materially below new construction, value-conscious tenants in construction, trades, distribution, and light manufacturing are filling this space rapidly.

Who’s Driving Demand? The Top 5 Industries

The sector-level data tells an equally compelling story. Five industries led leasing activity in 2025, and the shifts from 2024 are significant:

What This Means for Owners and Occupiers

Whether you own industrial property or occupy it, the 2025 data carries clear implications:

For Landlords:

• The window of elevated tenant leverage that characterized 2023–2024 is narrowing. With demand accelerating and large-format deals returning, tenants with upcoming lease events should be proactive in their planning
• Cost-conscious occupiers willing to accept older vintage space can still find competitive options,  but those deals are filling fast given the record small-bay activity.

• Whether 3PL demand sustains its 2025 momentum, or whether it reflected pent-up  post-pandemic supply chain restructuring that will moderate
• How the new supply pipeline is absorbed significant Class A square footage delivered 2023–2024 remains available, and continued big-box leasing is needed to reduce that overhang
• The impact of tariff uncertainty and Canada-U.S. trade policy on the manufacturing and distribution sectors. If trade tensions ease, further demand acceleration is likely; if they escalate, occupiers may delay commitments.