Q4 2025 Canadian Industrial Sublease Market Report

Welcome to the latest edition of Toronto Industrial Intel. This week, we’re stepping back from the GTA to take a national view of one of the most telling indicators of market health: industrial sublease space. Sublease availability is often the canary in the coal mine, it reveals how occupiers are feeling about their space needs in real time, well before direct vacancy catches up.

Using Cushman & Wakefield’s Q4 2025 Canadian Industrial Sublease Market report, we’ll walk through the key numbers across Vancouver, Calgary, Toronto, Ottawa, and Montreal—and dig into what they mean for investors, occupiers, and anyone trying to read where the market is heading.

The Big Picture: 11 Million Square Feet of Sublease Space Nationally

Across Canada’s five major industrial markets, total sublease space sits at approximately 11 million square feet. That number alone doesn’t tell you much—context matters. What’s notable is the composition: the bulk of this space is concentrated in large blocks, and the majority of it sits in relatively modern buildings.

Toronto dominates the national sublease picture with 6.2 MSF of sublease vacancy, representing 14.5% of total vacant space in the market. Montreal follows with 2.5 MSF (9.1% of vacant), then Vancouver at 1.2 MSF (10.8%), Calgary at 1.1 MSF (12.8%), and Ottawa at 250,000 SF (14.9%).

Market-by-Market: Where Sublease Is Growing—and Where It’s Not

Vancouver: A Welcome Pullback
Vancouver’s sublease market is one of the few bright spots nationally. Sublease vacancy declined 10.2% both year-over-year and quarter-over-quarter, bringing the total down to 1.24 MSF. At 10.8% of total vacant space, sublease remains a meaningful share—but the direction is encouraging. Occupiers in Vancouver appear to be absorbing or pulling back surplus space rather than adding to it.

Calgary: Climbing Fast
Calgary is moving in the opposite direction. Sublease space rose 7.0% year-over-year and surged 16.9% in Q4 alone, reaching 1.06 MSF. At 12.8% of total vacancy, sublease is becoming a more prominent feature of Calgary’s industrial landscape. The quarterly jump is particularly notable—it suggests a wave of occupiers reassessing their footprints in the market, likely tied to softening demand in the energy-adjacent logistics sector.

Toronto: Stabilizing, But Still the National Leader
Toronto remains the country’s largest sublease market by a wide margin at 6.19 MSF. The year-over-year decline of 1.9% is modest, and the 7.5% increase quarter-over-quarter shows the market hasn’t fully stabilized. Sublease space now accounts for 14.5% of total vacancy—a significant share that reflects the adjustment many tenants are making after the aggressive expansion cycle of 2021–2023.

Ottawa: Small Market, Big Spike
Ottawa’s numbers demand context. At 249,780 SF, the sublease market here is tiny by national standards. But the 94.3% year-over-year increase is striking. In a market this small, a single large block hitting the market can move the needle dramatically. Still, at 14.9% of total vacant space, sublease is taking up a notable share—worth monitoring going forward.

Montreal: Mixed Signals
Montreal presents a nuanced picture. Sublease space grew 14.3% year-over-year to 2.46 MSF, but fell 8.7% quarter-over-quarter. That sequential pullback is encouraging and may signal that some of the larger blocks have been absorbed or withdrawn. At 9.1% of total vacancy, Montreal’s sublease share is the lowest among the five major markets—a sign of relative health.

Sublease Composition: Dominated by Large Blocks in Modern Buildings
The profile of Canadian sublease space tells an important story about who’s giving back space and what kind of product is available.

By Size
The vast majority of sublease square footage is concentrated in large blocks. Spaces over 50,000 SF account for 6.73 MSF of the total—roughly 63% of all sublease space—across just 62 listings. Meanwhile, there are 282 total sublease availabilities, meaning the smaller deals (under 20,000 SF) are numerous but represent a fraction of the total footage.

The Bottom Line: If you’re a mid-to-large occupier, there is meaningful sublease opportunity across the country—particularly in the 20,000–50,000 SF and 50,000+ SF ranges. If you’re a smaller user, competition remains tighter.

By Term Remaining
Nearly half of all sublease availabilities (49.3%) have 1 to 3 years remaining on the term—the sweet spot for tenants looking for short-to-medium-term flexibility without a long commitment. Only 0.7% of listings have more than 5 years remaining, and 23.8% do not disclose their remaining term.

This distribution is typical of a sublease market driven by mid-lease corrections—tenants who leased aggressively during the boom and are now right-sizing before their terms expire.

By Building Vintage
The sublease data also reveals a concentration in newer product. Buildings constructed from 2000 onward account for the vast majority of sublease space, with the 2020-onwards vintage contributing a substantial share. This makes sense—tenants who leased brand-new product at peak rents during 2021–2023 are disproportionately represented in today’s sublease market. For occupiers, this means much of the available sublease space is high-quality, modern product—often at below-market rates.

What This Means for the Market

For tenants: This is a window of opportunity. With 5.3 MSF of sublease space available nationally—much of it in modern, high-spec buildings—occupiers have leverage they haven’t had in years. Sublease rates are typically below direct asking rents, and the 1–3 year term profile offers flexibility. If you’ve been waiting for the right moment to expand, relocate, or upgrade your space, the sublease market is where to look.

For landlords and investors: Sublease activity is a leading indicator. The stabilization in Toronto and Vancouver is encouraging, but the growth in Calgary and Ottawa deserves attention. Tenant retention is more important than ever. Be proactive with renewals, offer flexibility on term and rate, and recognize that your tenants have options—including giving your space back.

For the market broadly: Sublease at 5.3 MSF is not a crisis. It’s a correction. The industrial sector is recalibrating after an unprecedented expansion cycle, and sublease space is the mechanism through which that recalibration happens. As these short-term leases roll off and occupiers settle into right-sized footprints, the sublease overhang will gradually work itself out.

Final Thoughts: Read the Sublease Market—It’s Telling You Where Things Are Headed

The sublease market is one of the best real-time indicators of occupier sentiment. When sublease space is growing, it tells you tenants are pulling back. When it’s shrinking, it signals confidence is returning. Right now, the picture is mixed—Vancouver is tightening, Toronto is stabilizing, Calgary and Ottawa are loosening, and Montreal is sending mixed signals.

What’s clear is that we’re past the peak of the sublease cycle nationally. The explosive growth of 2023 and 2024 has moderated. The trajectory from here will depend on broader economic conditions—interest rates, trade policy, and the health of the logistics and e-commerce sectors that drive industrial demand.

Those with patient capital and a long-term view will be positioned to benefit. The industrial fundamentals across Canada remain sound, and the sublease correction is a healthy part of a maturing market cycle.

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.

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.

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