July 24th, 2026
As we move through Q2 2026, the GTA Central Markets continue to demonstrate resilience amid an evolving economic landscape. The Toronto Central Markets — comprising Toronto, North York, Etobicoke, Scarborough, East York, and York — remain a stable anchor within the broader Greater Toronto Area industrial market, supported by constrained land supply, proximity to labour, and strong infrastructure connectivity. While vacancy continued its gradual upward drift and rental rates softened further, the standout story of the quarter was a marked resurgence in investment activity, headlined by one of the largest single-asset industrial trades in the region in recent years.
In Q2 2026, the GTA Central Markets recorded a total inventory of 225,245,463 SF across 4,340 buildings. The overall availability rate rose modestly to 4.0%, up from 3.9% in Q1 2026, with lease availability at 3.6% (including 0.4% sublease) and sale availability at 0.4%. The quarter saw negative absorption of 434,824 SF — the second consecutive quarter of negative absorption — bringing the year-to-date figure to negative 870,614 SF. Leasing activity totalled 1,165,196 SF for the quarter, lifting first-half volume to 2,452,374 SF and confirming that occupier demand, while selective, has not retreated.
The weighted average asking net rent declined to $14.75 PSF from $15.05 PSF in Q1, with additional rent at $4.43 PSF. The weighted average asking sale price moderated to $360.55 PSF from $375.92 PSF. Against this backdrop of continued repricing, sales activity surged: 1,056,154 SF traded in the quarter, including sixteen transactions over 20,000 SF totalling approximately $333 million, clear evidence that both institutional and private capital view current pricing as an attractive entry point.
Why Are GTA Central Markets So Sought-After?
The Toronto Central Markets remain highly prized by both investors and occupiers for compelling reasons:
- Proximity to Labour and Population Density: Direct access to a robust labour force and high-density residential centres reduces operational transportation costs significantly.
- Lower Development Charges: Compared to 905-region alternatives, development charges remain competitive, supporting both renovation and new development projects.
- Strategic Transportation Access: Major highways, public transit infrastructure, and proximity to major transportation nodes provide unparalleled connectivity.
- Modern Distribution Center Demand: Consistent developer interest in infill sites for modern distribution centres and industrial condominiums continues to drive value creation.
These factors collectively position Toronto Central as a magnet for investors hedging portfolio concentration risk, occupiers optimizing supply chain efficiency, and developers seeking infill redevelopment opportunities.
Key Takeaways from Q2 2026 – Toronto Central Markets
- The overall availability rate rose slightly to 4.0%, with lease availability at 3.6% (including 0.4% sublease) and sale availability at 0.4%;
- There was 1,780,370 SF under construction, concentrated entirely in Scarborough;
- The quarter recorded negative absorption of 434,824 SF, the second consecutive negative quarter, bringing year-to-date absorption to negative 870,614 SF;
- Leasing activity totalled 1,165,196 SF, bringing first-half 2026 leasing to 2,452,374 SF;
- The weighted average asking net rent was $14.75 PSF, down from $15.05 PSF in Q1 2026, with additional rent of $4.43 PSF;
- The weighted average asking sale price was $360.55 PSF, down from $375.92 PSF in Q1 2026;
- Sales activity surged to 1,056,154 SF for the quarter — sixteen transactions over 20,000 SF totalling approximately $333 million, led by the $112.35 million sale of 2750 Morningside Avenue in Scarborough at a 5.0% cap rate.
Navigating Q2 2026: Market Dynamics and Forward Outlook
Through the second quarter of 2026, the Toronto Central Markets have continued to display characteristic resilience amid trade policy uncertainty and cautious capital markets. Across the broader GTA, new leasing activity reached its second-highest quarterly level since 2018, lifting first-half 2026 volume to a record 17.6 MSF, while overall GTA vacancy declined 20 bps to 4.9%. Several key themes are shaping activity in the Central Markets:
Leasing Momentum: Q2 2026 leasing activity remained healthy, with 1,165,196 SF of new commitments recorded across the GTA Central submarkets. Significant transactions occurred in Etobicoke at The Birmingham development — 157,710 SF at 60 Birmingham Street Building 1 and 62,903 SF leased by JiuFang Canada E-Commerce Logistics at Building 2 — alongside Wakefield Canada’s 112,080 SF commitment at 3620 Lake Shore Boulevard West and Lush Cosmetics’ 95,601 SF renewal at 450 Evans Avenue. In East York, 89,220 SF was leased at 125 Bermondsey Road. The continued preference for functional, well-located logistics space drove a steady stream of occupier commitments.
Rental Rate Continued Softening: The weighted average net asking rent for GTA Central declined to $14.75 PSF, extending the broader repricing trend now in its ninth consecutive quarter. Properties with functional constraints — lower ceiling heights, limited truck access, or dated infrastructure — continue to bear the steepest discounts, with several older-generation and sublease spaces transacting in the $8.50 to $12.75 PSF range, while modern, high-bay facilities continued to command rates in the $17.00 to $19.00 PSF range.
Investment Activity: Q2 2026 was the strongest investment quarter for the Central Markets in recent memory. Sixteen properties over 20,000 SF changed hands, totalling approximately 1,047,599 SF and $333 million. Pricing ranged from $110 PSF to $439 PSF, reflecting the widening spread between commodity industrial product and well-located, functional assets. Institutional capital returned in force: GWL Realty Advisors acquired 2750 Morningside Avenue (333,638 SF) from Oxford Properties for $112.35 million ($337 PSF, 5.0% cap rate), while Oxford also divested 115 Bridgeland Avenue in North York. User purchasers remained active as well, accounting for eight of the sixteen trades — a clear signal that owner-occupiers view current pricing as a favourable acquisition window.
GTA Central Markets (Scarborough)
Properties Sold between April 2026 – June 2026, from 20,000 SF plus
| Address | Size (SF) | Lot (Ac) | Sale Price | $/PSF | Type |
|---|---|---|---|---|---|
| 1500 Midland Avenue | 25,663 | 1.49 | $10,300,000 | $401 | User |
| 2275 Markham Road | 35,226 | 2.00 | $12,500,000 | $355 | Investment |
| 35 Crockford Boulevard | 35,625 | 1.17 | $3,930,082 | $110 | Investment |
| 555 Ellesmere Road | 36,676 | 2.58 | $14,000,000 | $382 | User |
| 5200 Finch Avenue East | 62,560 | 3.11 | $17,750,000 | $284 | Investment |
| 921 Progress Avenue | 89,159 | 6.15 | $26,650,000 | $299 | Investment |
| 2750 Morningside Avenue | 333,638 | 18.98 | $112,350,000 | $337 | Investment |
In Scarborough in Q2 2026, 7 properties were sold (totalling 618,547 SF); 2 were user sales and 5 were investment sales. The prices achieved ranged from $110 PSF to $401 PSF, with an average building size of 88,364 SF and an average price of $310 PSF. The headline transaction was GWL Realty Advisors’ $112.35 million acquisition of 2750 Morningside Avenue from Oxford Properties at a 5.0% cap rate — among the largest single-asset industrial trades in the Central Markets in recent years.
Properties Leased between April 2026 – June 2026, from 20,000 SF plus
| Address | Leased SF | Ceiling Height | Net Rent (PSF) |
|---|---|---|---|
| 390 Tapscott Road † | 23,165 | – | $12.75 |
| 44 Rolark Drive #2 | 34,222 | 22’ | $15.50 * |
| 111 Sinnott Road | 47,429 | 24’ | $14.65 |
* asking rental rate † sublease
In Scarborough in Q2 2026, 3 properties were leased (totalling 104,816 SF). The net rental rates ranged from $12.75 PSF to $15.50 PSF (*asking), with an average building size of 34,939 SF and an average net rental rate of $14.30 PSF.
GTA Central Markets (North York)
Properties Sold between April 2026 – June 2026, from 20,000 SF plus
| Address | Size (SF) | Lot (Ac) | Sale Price | $/PSF | Type |
|---|---|---|---|---|---|
| 354 Signet Drive #3–5, 8 | 25,457 | – | $11,177,070 | $439 | User |
| 215 Dolomite Drive | 32,718 | 1.82 | $12,050,000 | $368 | User |
| 820 Garyray Drive | 44,328 | 2.14 | $15,500,000 | $350 | Investment |
| 420 Canarctic Drive | 44,368 | 2.00 | $16,636,620 | $375 | User |
| 115 Bridgeland Avenue | 55,272 | 2.99 | $18,350,000 | $332 | Investment |
| 455 Gordon Baker Road | 87,273 | 3.50 | $27,888,000 | $320 | User |
In North York in Q2 2026, 6 properties were sold (totalling 289,416 SF); 4 were user sales and 2 were investment sales. The prices achieved ranged from $320 PSF to $439 PSF, with an average building size of 48,236 SF and an average price of $364 PSF. Notable user acquisitions included Korsmet Inc.’s purchase of 455 Gordon Baker Road and Art for Everyday’s acquisition of 420 Canarctic Drive.
Properties Leased between April 2026 – June 2026, from 20,000 SF plus
| Address | Leased SF | Ceiling Height | Net Rent (PSF) |
|---|---|---|---|
| 80 Toro Road | 20,101 | 18’ | $14.50 |
| 4309 Steeles Avenue West #4327 | 20,800 | 16’9” | $14.95 * |
| 44 Samor Road | 20,892 | 14’ | $16.50 |
| 5 Kenhar Drive | 21,000 | 14’ | $14.00 |
| 101 Alexdon Road † | 24,819 | 14’7” | $9.50 |
| 360 Magnetic Drive | 33,083 | 18’ | $11.00 |
* asking rental rate † sublease
In North York in Q2 2026, 6 properties were leased (totalling 140,695 SF). The net rental rates ranged from $9.50 PSF to $16.50 PSF (*asking), with an average building size of 23,449 SF and an average net rental rate of $13.41 PSF.
GTA Central Markets (Etobicoke)
Properties Sold between April 2026 – June 2026, from 20,000 SF plus
| Address | Size (SF) | Lot (Ac) | Sale Price | $/PSF | Type |
|---|---|---|---|---|---|
| 260 Rexdale Boulevard | 63,550 | 2.42 | $15,500,000 | $244 | Investment |
In Etobicoke in Q2 2026, 1 property was sold: 260 Rexdale Boulevard, a 63,550 SF single-tenant facility, traded for $15,500,000 ($244 PSF) as an investment sale.
Properties Leased between April 2026 – June 2026, from 20,000 SF plus
| Address | Leased SF | Ceiling Height | Net Rent (PSF) |
|---|---|---|---|
| 10 Dansk Court #7–10 † | 21,321 | 17’5” | $10.00 * |
| 476 Evans Avenue | 23,730 | 27’ | $19.00 |
| 130 Claireville Drive #1 | 25,000 | 20’ | $17.00 * |
| 427 Horner Avenue † | 25,200 | 18’ | $8.50 |
| 130 Claireville Drive #2 | 29,940 | 20’ | $15.00 * |
| 22 Worcester Road | 39,564 | 22’8” | $14.00 |
| 14 Vansco Road #300 | 40,579 | 15’6” | $18.00 |
| 25 City View Drive | 50,000 | 14’ | $13.00 * |
| 60 Birmingham Street/Bldg 2 #2 | 62,903 | 36’ | $17.25 |
| 26 Monogram Place #A | 80,834 | 28’ | $14.95 * |
| 450 Evans Avenue/Bldg 2 #1 | 95,601 | 36’ | $18.25 * |
| 3620 Lake Shore Boulevard West | 112,080 | 14’ | $8.50 |
| 60 Birmingham Street/Bldg 1 | 157,710 | 36’ | $17.95 * |
* asking rental rate † sublease
In Etobicoke in Q2 2026, 13 properties were leased (totalling 764,462 SF) — by far the most active Central submarket of the quarter. The net rental rates ranged from $8.50 PSF to $19.00 PSF (*asking), with an average building size of 58,805 SF and an average net rental rate of $14.72 PSF. New-generation product at The Birmingham (36’ clear) achieved rates in the $17.25 to $17.95 PSF range, while older, lower-clear-height stock and sublease space transacted at meaningful discounts.
GTA Central Markets (East York)
No properties over 20,000 SF were sold in East York during Q2 2026.
Properties Leased between April 2026 – June 2026, from 20,000 SF plus
| Address | Leased SF | Ceiling Height | Net Rent (PSF) |
|---|---|---|---|
| 48–54 Carnforth Road † | 21,000 | – | $11.25 * |
| 254 Bartley Drive (Front) | 31,000 | 14’2” | $12.25 ‡ |
| 125 Bermondsey Road, Opt 6 | 89,220 | 26’10” | $16.75 |
* asking rental rate † sublease ‡ gross rental rate (first-year)
In East York in Q2 2026, 3 properties were leased (totalling 141,220 SF). Net rental rates ranged from $11.25 PSF (*asking) to $16.75 PSF, with one transaction — 254 Bartley Drive — completed on a gross basis at $12.25 PSF. The 89,220 SF lease at 125 Bermondsey Road, achieved at $16.75 PSF net against a $14.75 PSF asking rate after 337 days on market, underscores the premium occupiers will pay for rare 26’+ clear-height product in this tight submarket.
GTA Central Markets (York)
Properties Sold between April 2026 – June 2026, from 20,000 SF plus
| Address | Size (SF) | Lot (Ac) | Sale Price | $/PSF | Type |
|---|---|---|---|---|---|
| 390 Alliance Avenue | 37,691 | 1.54 | $9,200,000 | $244 | User |
| 400 Alliance Avenue | 38,395 | 1.94 | $9,300,000 | $242 | User |
In York in Q2 2026, 2 properties were sold (totalling 76,086 SF), both user sales acquired by FGF Brands (Wonder Brands Inc.) from Rudolph’s Bakeries as a two-property portfolio totalling $18,500,000, representing an aggregate price of approximately $243 PSF.
No properties over 20,000 SF were leased in York during Q2 2026
What Lies Ahead: Market Outlook
1. Rental Rates – Rental rate softening is entering its mature phase for the Central Markets. While the overall weighted average has declined to $14.75 PSF, the bifurcation between asset classes is now clearly visible in transaction data. We anticipate:
- Quality Assets: Newer buildings and fully modernized facilities with optimal specifications (28+ ft clear heights, truck-friendly design, e-commerce infrastructure) will stabilize first — Q2 achieved rates of $17.25 to $19.00 PSF for this cohort support that view.
- Secondary Stock: Older buildings with suboptimal characteristics will continue to face rent reductions as occupiers prioritize efficiency and modern operations.
- Annual Escalations: Modest escalations will resume as market confidence improves, though they will remain below historical norms.
- Market Balance: The market has transitioned to a more balanced environment between landlords and tenants — a healthy dynamic supporting rational transaction activity.
2. Property Values – Q2’s surge in transaction volume suggests the bid-ask gap that stalled activity through 2024–2025 is closing:
- Investment Properties: Values have moderated from elevated post-pandemic levels, and institutional capital is re-engaging at repriced levels — the 5.0% cap rate achieved at 2750 Morningside Avenue provides a fresh institutional benchmark for stabilized, modern Central Markets product.
- User Properties: Values remain relatively elevated given limited supply of quality owner-occupied buildings. Eight of sixteen Q2 sales were user acquisitions, confirming that strategic owner-occupiers are acting while pricing remains favourable relative to peak.
- Development Land: Valuations remain significantly below peak levels. Developers with patient capital should continue monitoring infill sites for long-term value accumulation.
3. Development Opportunities – The Toronto Central Markets remain a compelling development target:
- Infill Redevelopment: Strong developer interest continues for purchasing infill sites and redeveloping obsolete industrial facilities into modern distribution centres and industrial condominiums.
- Central Location Premium: The region’s proximity to major highways, labour markets, and transit infrastructure ensures sustained demand for well-positioned projects. The 1,780,370 SF under construction remains concentrated entirely in Scarborough.
- Distribution Centre Demand: Modern, purpose-built logistics facilities with high ceilings, efficient truck access, and e-commerce capabilities remain in structural demand, evidenced by the leasing velocity and rate premiums achieved at The Birmingham.
Conclusion
The Toronto Central Markets enter the second half of 2026 at an inflection point. Rental repricing continues, but the pace has moderated and quality assets are finding their floor. Most importantly, capital has returned: the strongest investment quarter in recent memory — approximately $333 million across sixteen transactions over 20,000 SF — signals renewed conviction in the region’s long-term fundamentals. Vacancy at 4.0% remains well below the GTA average of 4.9%, and the limited new supply pipeline in the Central Markets supports a constructive medium-term outlook.
For Investors: The market presents compelling risk-adjusted opportunities. Rationalized asset pricing, a fresh institutional cap-rate benchmark, and stabilizing rents for quality product create an attractive entry point for capital deployed strategically.
For Landlords: Maintaining well-maintained, modern facilities is essential. The spread between achieved rates on modern versus dated product widened again in Q2 — quality assets in prime locations command premium positioning and stable tenancy.
For Owner-Occupiers: Supply constraints and moderate pricing continue to present a favourable window for tactical acquisition — as half of this quarter’s buyers demonstrated — before the market moves toward recovery.
For Developers: Infill redevelopment sites in central locations remain strategically valuable. The region’s structural fundamentals — labour proximity, highway access, transit connectivity — support long-term value creation.
A lot of transactions are being done off the market. To participate in these opportunities, connect with experienced brokers who maintain long-standing relationships with property owners and occupiers.
For a confidential consultation or a complimentary opinion of value of your property, please reach out to our team.
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
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