January 17th, 2025
As we enter into a New Year, we find ourselves in situation that is more profound than another rotation around the Sun.
Between 12 to 18 months ago, the Greater Toronto industrial market faced an inflexion point as interest rates increased quickly against a backdrop of market-high asking rates and values along with a flood of new construction. At that point, we began to see a noticeable drop in activity and delayed decisions as the upswing in the markets had become unsustainable.
Today, there remains uncertainty, however, we can all feel the coming change. After more than a year of slow-moving transactions, we now also see lowering interest rates, an incoming US administration, and rumours of political change in Canada.
Overall, while few will be able to predict the coming events of 2025, there is a tremendous optimism surrounding business growth, expansion, and optimization.
The major question marks on most businesses minds are what will the new US government do as it relates to tariffs on Canadian goods… and how will this impact the various industry sectors across the country?
While the public debate may be nothing more than posturing and political negotiating, companies are making very real decisions in anticipation.
Some are reconfiguring their real estate portfolios in order to be flexible and agile so as to move their manufacturing just across the border while maintaining their distribution network. Others may be accelerating their near-shoring or on-shoring strategies that were developed at the height of the pandemic and resulting supply-chain bottlenecks.
Whatever the case, it’s important to understand what tariffs are. So without further ado, for this week’s newsletter, we’ll take a high-level look at tariffs and their potential impact on GTA industrial real estate.
Tariffs and Their Potential Impact on GTA Industrial Real Estate

US-Canada Border. Source: WSJ.
Tariffs have long been a tool of international trade policy, used to protect domestic industries or exert geopolitical pressure.
However, their ripple effects often extend far beyond their intended targets, influencing everything from consumer prices to real estate markets.
Recently, the United States has threatened to impose tariffs on Canadian goods, a move that could significantly impact the Greater Toronto Area (GTA)’s industrial real estate market.
As a hub for manufacturing, logistics, and warehousing, the GTA is uniquely positioned to feel the effects of these potential trade barriers.
This article explores the implications of these developments in the context of the evolving economic landscape.
Economic Context
Recent economic trends provide essential context for understanding the potential impacts of U.S. tariffs on Canadian goods. The Canadian dollar’s performance against the U.S. dollar, for example, can either amplify or cushion the effects of tariffs.
A weaker Canadian dollar makes exports more attractive but simultaneously raises costs for imports, intensifying the impact of tariffs on goods coming from the U.S. This dynamic could reshape trade flows and industrial activity in the GTA.
Interest rates also play a critical role. Rising rates, as seen in recent years, increase borrowing costs, potentially discouraging businesses from expanding their operations or investing in new facilities. This could dampen demand for industrial space.
However, industries adapting to U.S. tariffs might seek to relocate operations to the United States to avoid the additional costs, potentially impacting demand for industrial facilities in Canada.
In the broader economic context, inflation and GDP trends also influence the market. High inflation, often exacerbated by tariff policies, raises costs across the board, from construction materials to operational expenses for industrial properties. At the same time, a strong GDP performance could indicate robust economic activity that supports industrial growth, even in the face of higher costs.
Potential Impact of U.S. Tariffs on GTA Industrial Real Estate

Cross-Border Trucking. Source: XTL.
Demand for Space
The threat of U.S. tariffs on Canadian goods is prompting companies to rethink their supply chain strategies. For some businesses, the added costs of exporting goods to the U.S. could make maintaining operations in Canada less viable, leading them to shift production south of the border. This could dampen demand for industrial real estate in the GTA. However, companies that continue to operate in Canada may require additional warehousing and logistics facilities to manage new supply chain complexities.
Supply Chain Reconfigurations
One of the most significant impacts of U.S. tariffs is the reconfiguration of supply chains. Companies facing higher export costs to the U.S. may seek to relocate production to the U.S. to bypass tariffs, reducing their reliance on Canadian industrial space. Conversely, some businesses might focus on diversifying their markets or investing in technology to offset increased costs, which could maintain or even increase demand for specialized facilities in the GTA.
Rents and Vacancy Rates
The dynamics of supply and demand are likely to influence rents and vacancy rates in the GTA’s industrial real estate market. A decline in demand due to companies relocating operations could temporarily increase vacancy rates, particularly in submarkets reliant on export-driven tenants. On the other hand, uncertainty surrounding U.S. trade policy might lead some businesses to delay leasing decisions, further impacting vacancy rates. However, sectors less affected by tariffs, such as e-commerce, could sustain demand and keep rents stable in certain areas.
Case Studies or Recent Trends
Recent examples underscore the tangible effects of trade tensions on the GTA industrial market. For instance, the automotive sector, a key driver of industrial demand in the region, has faced challenges due to prior U.S. tariffs on steel and aluminum. These tariffs increased production costs, prompting some manufacturers to relocate operations closer to the U.S. market. Similarly, the rise in e-commerce, accelerated by the COVID-19 pandemic, has heightened demand for logistics and warehousing space, a trend that U.S. tariffs could moderate as businesses adjust their supply chains.
Broader Business Implications
U.S. tariffs on Canadian goods impact key industries in the GTA, shaping their demand for industrial real estate. The automotive sector, reliant on cross-border supply chains, may see increased costs and delays, driving some companies to consider relocating production facilities to the U.S.
Cross-border trade is another critical consideration. The GTA’s strategic location near the U.S. border makes it a vital hub for customs and distribution facilities. Tariff-induced changes to trade volumes and patterns could elevate the importance of these facilities, but the extent of demand growth will depend on how businesses respond to increased costs and logistical challenges.
Opportunities and Risks for Investors and Brokers
For investors and brokers, U.S. tariffs on Canadian goods present both opportunities and risks. On the one hand, certain sectors, such as e-commerce or domestic-focused manufacturing, could sustain or increase demand for industrial properties. Identifying these sectors could yield attractive returns.
On the other hand, uncertainty surrounding U.S. trade policies poses significant risks. Businesses may delay or cancel expansion plans, impacting leasing activity and slowing market growth. Additionally, higher construction costs driven by tariffs on imported materials could challenge developers, potentially leading to supply shortages and further upward pressure on rents.
Conclusion:
The threat of U.S. tariffs on Canadian goods adds a layer of complexity to the GTA industrial real estate market. While these tariffs can disrupt existing supply chains and incentivize some businesses to relocate operations, they also drive companies to adapt, creating opportunities for sectors focused on domestic markets.
For the GTA, a region well-positioned to navigate these shifts, the net impact of U.S. tariffs will depend on a confluence of factors, including currency fluctuations, interest rates, and broader economic trends.
Looking ahead, stakeholders in the GTA’s industrial real estate market should remain vigilant, monitoring trade policy developments and economic indicators closely. By staying informed and agile, they can navigate the complexities of a tariff-influenced landscape, leveraging emerging opportunities while mitigating risks.
Next week, we will continue our discussion and dive into the numbers to get a better sense of the impact of tariffs on the broader economy and its trickle-down effects on the industrial real estate market.
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
Goran Brelih, SIOR
Executive Vice President, Broker
Cushman & Wakefield ULC, Brokerage.
www.cushmanwakefield.com
Office: 416-756-5456
Mobile: 416-458-4264
Mail: goran.brelih@cushwake.com
Website: www.goranbrelih.com