Q4 2025 Insight, Toronto-Central Markets

As we enter 2026, the GTA Central Markets demonstrate remarkable resilience amid a year of economic transition and market recalibration. The Toronto Central Markets—comprising Toronto, North York, Etobicoke, and Scarborough—have navigated 2025 with notable momentum in leasing activity coupled with measured vacancy growth, positioning the region as a stable anchor within the broader Greater Toronto Area industrial landscape.

In Q4 2025, the GTA Central Markets maintained their status as a focal point for commercial real estate activity. With a total inventory of 224,534,608 SF, the region experienced positive absorption of 262,719 SF in the quarter—a meaningful reversal from the negative absorption seen throughout much of 2025. The overall availability rate stood at 3.7%, with lease availability at 3.3% and sale availability at 0.4%. This performance reflects both stabilizing market conditions and continued investor interest in strategically located industrial assets.

Notably, the weighted average asking net rent declined to $15.78 PSF from $16.08 PSF, with additional rent increasing to $4.26 PSF. The weighted average asking sale price declined to $372.54 PSF, reflecting the broader market adjustment observed throughout the year. These metrics underscore the transitional nature of the market—a shift from the elevated valuations of the post-pandemic period toward more sustainable, fundamentals-based pricing.

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 Labor and Population Density: Direct access to a robust labor force and high-density residential centers 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 centers and industrial condos 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 Q4 2025 – Toronto Central Markets

• The availability rate held steady at 3.7%, with lease availability at 3.3% and sale availability at 0.4%;
• We had 884,486 SF under construction;
• We experienced positive absorption of 262,719 SF in the quarter, representing a significant recovery;
• The weighted average asking net rent was $15.78 PSF, down from $16.08 PSF in Q3, with additional rent of $4.26 PSF; and
• The weighted average asking sale price decreased from $400.16 PSF to $372.54 PSF.

Navigating Q4 2025: Market Dynamics and Forward Outlook

Throughout 2025, the Toronto Central Markets demonstrated characteristic strength amid broader economic uncertainty. Occupiers and investors alike engaged in pragmatic market assessment, with several key trends emerging:

Leasing Momentum: Q4 2025 closing leasing activity remained robust, with significant commitments from larger occupiers. The continued preference for class A, purpose-built logistics facilities in central locations drove a steady stream of transactions.

Rental Rate Rationalization: After several consecutive quarters of downward pressure, particularly impacting Class B and C assets, the market has begun reaching rational pricing levels. Properties with functional constraints—lower ceiling heights, suboptimal truck access, or outdated infrastructure—experienced steeper rent reductions. Newer, modern facilities maintained relatively stable rental rates.

Investment Positioning: Savvy investors positioned throughout 2025 to capture value from rational pricing. For well-capitalized buyers, the market presented attractive risk-adjusted opportunities absent since the pre-pandemic period.

Statistical Summary – GTA Central Markets – Q4 2025

Market Analysis by Submarket

GTA Central Markets (Scarborough)
Properties Sold between October 2025 – December 2025, from 20,000 SF plus

In Scarborough in Q4 2025, 2 properties were sold (totalling 102,419 SF); 1 was an investment sale and 1 was a user sale. The prices achieved were in the range of $319 PSF – $347 PSF, with an average building size of 51,210 SF and an average price of $333 PSF.

Properties Leased between October 2025 – December 2025, from 20,000 SF plus

In Scarborough in Q4 2025, 9 properties were leased (totalling 576,369 SF). The net rental rates achieved were from $13.00 PSF to $18.95 PSF, with an average building size of 64,041 SF and an average net rental rate of $16.80 PSF.

The standout transaction—601 Milner Avenue—represents a significant user commitment and demonstrates continued occupier confidence in Scarborough’s market fundamentals for high-bay, modern distribution facilities.

GTA Central Markets (North York)
Properties Sold between October 2025 – December 2025, from 20,000 SF plus

In North York in Q4 2025, 4 properties were sold (totalling 344,380 SF); 1 was an investment sale and 3 were user sales. The prices achieved were in the range of $225 PSF – $383 PSF, with an average building size of 86,095 SF and an average price of $293.75 PSF.

Properties Leased between October 2025 – December 2025, from 20,000 SF plus

In North York in Q4 2025, 5 properties were leased (totalling 235,554 SF). The net rental rates achieved were from $11.95 PSF to $16.95 PSF, with an average building size of 47,111 SF and an average net rental rate of $14.33 PSF.

GTA Central Markets (Etobicoke)
Properties Sold between October 2025 – December 2025, from 20,000 SF plus

In Etobicoke in Q4 2025, 3 properties were sold (totalling 221,876 SF); all were user sales. The prices achieved were in the range of $255 PSF – $341 PSF, with an average building size of 73,959 SF and an average price of $290.67 PSF.

Properties Leased between October 2025 – December 2025, from 20,000 SF plus

In Etobicoke in Q4 2025, 8 properties were leased (totalling 641,530 SF). The net rental rates achieved were from $9.50 PSF to $19.00 PSF, with an average building size of 80,191 SF and an average net rental rate of $14.95 PSF.

The 454 Evans Avenue transaction (158,610 SF) represents a significant commitment from a major occupier, reflecting continued demand for purpose-built, high-ceiling logistics space in Etobicoke’s coveted central locations.

What Lies Ahead: Market Outlook

1. Rental Rates

Rental rate adjustments have reached a stabilization point for quality assets, though downward pressure persists for Class B and C properties with functional constraints. We anticipate:

• Quality Assets: Newer buildings and fully modernized facilities with optimal specifications (28+ ft clear heights, truck-friendly design, e-commerce infrastructure) will maintain relatively stable rental rates.
• 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

As rental rates stabilize and reach rational levels, property valuations will follow:

• Investment Properties: Values will moderate from elevated post-pandemic levels. Cap rate expansion reflects both reduced lease rates and market risk repricing.
• User Properties: Values remain relatively elevated given limited supply of quality owner-occupied buildings. Strategic owner-occupiers should continue to evaluate acquisition opportunities while valuations normalize.
• Development Land: Valuations have declined significantly (approximately 30% from peak) given the reduced new-construction pipeline and market uncertainty. Developers with patient capital should monitor 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 centers and industrial condos.
• Central Location Premium: The region’s proximity to major highways, labor markets, and transit infrastructure ensures sustained demand for well-positioned projects.
• Distribution Center Demand: Modern, purpose-built logistics facilities with high ceilings, efficient truck access, and e-commerce capabilities remain in structural demand.

Conclusion

The Toronto Central Markets close 2025 positioned for sustainable growth. After a year of market rationalization—including rental rate adjustments and value repricing—the region has established a foundation for measured, fundamental-driven expansion.

For Investors: The market presents calculated opportunities. Rationalized asset prices combined with stabilizing rents create attractive risk-adjusted returns for capital deployed strategically.
For Landlords: Maintaining well-maintained, modern facilities is essential. Quality assets in prime locations command premium positioning and stable tenancy.
For Owner-Occupiers: Supply constraints and moderate pricing present a favorable window for tactical acquisition before additional appreciation.
For Developers: Infill redevelopment sites in central locations remain strategically valuable. The region’s structural fundamentals—labor 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