The GTA’s industrial market closed out 2025 with a story that’s equal parts challenge and resilience. Vacancy climbed, rents continued to soften, and the market absorbed the aftershocks of a historic new supply wave. Yet for all the hand-wringing, the GTA remains one of the tightest and most sought-after industrial markets on the continent. This newsletter—the first in a three-part Q4 2025 series—sets the stage with the big picture: where the GTA stands nationally, how demand is cushioning the vacancy blow, and what the rent landscape looks like heading into 2026.

Improved Demand Cushions Vacancy Increases

Vacancy growth moderated in 2025, with stronger second-half demand helping to offset new supply pressures. That’s the headline—and it’s an important one. After watching vacancy shoot upward for the better part of two years, the market found a measure of equilibrium in the back half of the year. Total year-to-date absorption reached 6.5 million square feet (MSF), a solid improvement that helped absorb a significant portion of the 11.3 MSF of new supply delivered over the same period.

The 5.0% vacancy rate—while elevated by recent historical standards—needs context. Just three years ago, vacancy sat below 1%, a level so tight it was throttling growth and sending rents into the stratosphere. The current level, while a significant jump, represents a market that’s moving toward a healthier equilibrium rather than falling off a cliff.

Fast-Growing Markets Face the Biggest Vacancy Jumps

GTA West remains a key hub for industrial development while GTA East emerges as a vacancy hotspot. The map below shows how each submarket is performing relative to the prior year.

GTA West posted the strongest absorption at 3.2 MSF but also delivered the most new supply at 5.4 MSF, pushing vacancy to 6.0%. GTA East’s vacancy rate of 7.3% is the highest in the region, though encouragingly it’s actually down year-over-year. Average asking net rents declined across every submarket—a universal theme heading into 2026.

A Leading North American Industrial Hub

With 849 million square feet of total inventory, the GTA ranks as the third-largest industrial market in North America—trailing only Chicago (1,259 MSF) and Dallas (1,026 MSF), and ahead of heavyweights like Los Angeles (802 MSF) and Atlanta (787 MSF). That’s not a small distinction. It underscores the sheer scale and strategic importance of this market for logistics, manufacturing, and distribution operations serving not just the Canadian economy but the cross-border supply chain with the United States.

Moving Up the Vacancy Scale, Yet Still Ahead of Most

Despite a 50-basis-point rise in vacancy over the past year, the GTA’s 5.0% vacancy rate still places it among the top five tightest industrial markets in North America. Only Vancouver (4.5%), Los Angeles (4.6%), and Chicago (4.7%) are tighter. For context, Phoenix sits at 12.7%, Atlanta at 9.0%, and Dallas at 8.1%.

A Little Perspective: Greater Vancouver’s total vacancy sits at 11.4 MSF. The GTA’s is 42.6 MSF. But with an inventory nearly four times larger, the GTA’s relative tightness remains impressive.

Supply Pushes Ahead as Demand Enters a New Phase

The supply-demand imbalance that’s been pressuring the GTA isn’t unique—it’s a continental phenomenon. Across North America’s major industrial markets, supply has outpaced demand from Q4 2022 through Q4 2025. Dallas, Phoenix, Chicago, and Indianapolis have all seen massive supply deliveries relative to absorption. The GTA fits squarely into this pattern.

The silver lining? The GTA’s supply-demand gap is narrower than many U.S. peers, and absorption in the second half of 2025 showed encouraging signs of life.

Rent Growth Pulls Back—But the Bigger Picture Still Looks Strong

Average asking rents have been declining for seven straight quarters now, and the GTA has slipped from second to fifth place among major North American markets in terms of rental rates. At $16.57 PSF (net), the GTA trails New Jersey–Central ($20.67), Vancouver ($19.23), the Inland Empire ($17.41), and Phoenix ($17.24).

That said, zooming out to the five-year window from Q4 2020 to Q4 2025, rents in the GTA are still up 66.0%—outpacing markets like Vancouver (40.9%), Los Angeles (35.7%), and Chicago (14.0%). The recent retreat in rents is real, but it’s coming off a base that saw near-record appreciation during the pandemic-era logistics boom.

GTA Industrial Rents Recede, Losing Top-Three Status

Steady declines have pushed the GTA from second to fifth highest among major North American industrial markets. Current weighted average asking net rents of $16.57 PSF (CAD) put the GTA behind New Jersey–Central, Vancouver, the Inland Empire, and Phoenix. Markets like Montreal ($14.60 PSF), Pennsylvania ($12.44 PSF), and Dallas ($11.06 PSF) trail at a considerable distance, underscoring that the GTA—even in retreat—remains a premium market by any measure.

Rent Trends by Size: Declines Across the Board

The rent correction is broad-based. Five-year growth rates across all size categories have tumbled sharply from the more-than-double levels recorded just a year earlier.

The 200K+ SF category still commands the highest five-year growth at 79.5%—a reflection of the massive premiums that big-box distribution space commanded during the logistics boom. Smaller bays in the 1–20K SF range carry the highest absolute rent at $17.47 PSF, consistent with the chronic scarcity of small-format industrial space across the GTA.

What’s Coming in Newsletters 2 and 3
In our next installment, we’ll dive into evolving demand trends—preleasing activity, vacancy patterns by building size, the sublet market, and how leasing is shaping up across size categories. In Newsletter 3, we’ll look ahead with rent and vacancy forecasts, plus a detailed spotlight on the GTA Central submarket including significant deals and available buildings.

If you have questions about how these trends affect your portfolio or your next move in the GTA industrial market, don’t hesitate to reach out.

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