This is the final installment of our three-part Q4 2025 GTA Industrial Market Watch series. In Newsletter 1, we established the big picture—the GTA’s standing among North American industrial markets, its vacancy trajectory, and the rent landscape. In Newsletter 2, we unpacked the demand side—preleasing trends, vacancy by size segment and region, sublease dynamics, and leasing activity patterns. Now we turn to the question that every investor, landlord, and tenant is asking: where is this market going? We’ll also provide a detailed GTA Central submarket spotlight, because that’s where my team and I operate every day.

Rent Outlook: No Material Change Expected in Current Trends

Let’s be direct: a return to the record-setting rent growth of 2021–2023 is not on the horizon. Average asking rents have been declining for seven consecutive quarters, and the data points to continued softening—albeit at a more moderate pace.

The trending-down scenario—which assumes current conditions persist—projects an annualized decline of approximately 1.15%. That would take average rents toward the $16.00 PSF range by late 2026. The low and high scenarios bracket the possibilities: in a mild recovery, rents could stabilize and tick up modestly at 0.50% annually; in a stronger-than-expected demand environment, growth could reach 2.0% annualized.

New construction continues to command a premium of approximately $1.50 PSF over the market average, reflecting the higher specifications (40’+ clear heights, ESFR sprinklers, modern shipping configurations) that today’s logistics users require. The peak asking net rent on the market reached $19.09 PSF in Q4 2022—the high-water mark that now looks increasingly distant.

Vacancy Forecast: Gains Expected to Slow, then Flatten

The more hopeful story is on the vacancy side. An easing development pipeline is expected to moderate upward vacancy pressure over the next two years.

New supply peaked at 14.6 MSF in 2023 and has been declining since. Forecasted deliveries of 7.3 MSF in both 2026 and 2027 represent a significant cooldown from peak levels—a natural market response as developers pull back on new starts in the face of longer absorption timelines and tighter financing conditions.
The forecast assumes balanced demand absorption of approximately 4.6 MSF annually. Under these conditions, vacancy is projected to edge up modestly to 5.5% in 2026 and 5.7% in 2027 before flattening out. For perspective, the GTA’s long-term historical average vacancy rate sits in the 4–5% range, so even the projected peak is not dramatically out of line with historical norms—it just feels that way after years of sub-1% vacancy.

The Bottom Line: The worst of the vacancy spike is likely behind us. While we’re not going back to sub-1% any time soon, the rate of increase is decelerating, and by 2027 the market should be operating in a more stable equilibrium.

Before we dive into the GTA Central spotlight, here’s a quick overview of all five GTA submarkets at Q4 2025:

GTA North now commands the highest average asking net rent in the GTA at $17.19 PSF, edging past GTA West ($17.01 PSF)—a reflection of the premium that Vaughan and Markham locations continue to command. GTA East’s vacancy rate of 7.3% is the highest in the region, though it’s actually down year-over-year, suggesting that absorption in the eastern corridors is starting to catch up with supply. GTA Central’s negative absorption of -918,561 SF reflects the unique dynamics of a mature, constrained submarket where space is being returned faster than it’s being absorbed.

GTA Central: A Detailed Look

GTA Central—encompassing East York, Etobicoke, North York, Scarborough, Toronto, and York—is the industrial heartland of the city. With 224.4 million square feet of inventory across these six established submarkets, it’s the largest of the GTA’s four regions and one of the most complex.

Etobicoke leads in both total availability (3.2 MSF) and leasing activity (1.3 MSF in YTD transactions), reflecting its role as the GTA Central workhorse. Average sale prices across GTA Central average $400.16 PSF, with Scarborough commanding the highest asking prices at $465.26 PSF—driven primarily by industrial condo product. Average TMI (taxes, maintenance, and insurance) across the region sits at $4.15 PSF.

GTA Central: Signficant Deals 

The range of achieved rental rates—from $9.00 PSF to $17.50 PSF—reflects the diversity of product quality and vintage across GTA Central. Newer, high-spec product commanded top-of-market rates, while older stock transacted at significant discounts. The average achieved rental rate on deals over 100,000 SF was $14.96 PSF, compared to an average asking rate of $15.23 PSF—a gap of just $0.27 PSF.

GTA Central: Key Stats on Availabiliities and Deals

GTA Central: Notable Buildings Available for Lease (100,000+ SF) 

With 15 blocks available for lease over 100,000 SF, tenants searching for large-format space in GTA Central have more options than they’ve had in years. Here are some of the more notable availabilities:

Highlights include a brand-new, state-of-the-art last-mile distribution facility in south Etobicoke at 541 Kipling Avenue (up to 337,100 SF, 40’ clear, $18.50 PSF net), The Birmingham at 60 Birmingham Drive offering premium space with 36’ clear heights ($17.95 PSF net), and the Steeles Connect Industrial Campus in Scarborough—a first-class 451,669 SF Class A building that’s sustainability-designed and zero-carbon-ready with 40’ clear heights and Steeles Avenue frontage. At 100 Metropolitan in Scarborough, an exceptional 740,657 SF facility offers highly functional industrial and office space with versatile configuration options.

Final Thoughts: A Market in Transition, Not in Trouble 

The GTA’s industrial market is undeniably in a period of adjustment. Vacancy has climbed, rents are softening, and the supply pipeline—while moderating—is still delivering significant new product. But let’s keep perspective: this is the third-largest industrial market in North America, with a vacancy rate that still ranks among the top five tightest on the continent, and rental rates that—even after seven quarters of decline—remain among the highest in the country.

For tenants, this is a window of opportunity. More options, more leverage, and more room to negotiate than at any point in the last decade. For landlords and investors, the focus should be on quality, flexibility, and tenant retention. The market rewards those who adapt.

For developers, the pullback in preleasing and the moderation in new starts signal a market that’s self-correcting. By 2027, the supply-demand balance should be back in healthier territory.

Those with patient capital and well-located sites will be positioned to benefit as the next cycle unfolds.

My team and I have been advising investors and occupiers in the GTA Central and GTA North industrial markets for over 30 years. If you’re navigating these market conditions—whether you’re looking to lease, sell, acquire, or develop—we’re here to help.

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