Toronto Industrial & Warehouse Market Report | Q1 2026

Toronto’s industrial warehouse market is at an inflection point. After two years of post-pandemic recalibration that pushed vacancy from sub-1% to 5.1%, the correction is showing clear signs of bottoming. Rents have effectively stabilized, leasing momentum is building, and the construction pipeline is shrinking to levels that virtually guarantee supply-driven tightening by late 2026. The GTA remains the tightest major industrial market in North America.

But this is not a simple recovery story. U.S.-Canada trade tensions, the upcoming CUSMA mandatory review in July 2026, and sustained tariff pressure are creating genuine uncertainty for logistics operators whose supply chains cross the border. For businesses looking for warehouse space in Toronto, the question is whether to lock in today’s tenant-favorable conditions before the pipeline dries up — or wait to see how trade policy shakes out. Here’s what the Q1 2026 data shows.

Market Snapshot: Q1 2026

Note: GTA industrial rents are typically quoted as net rates per square foot. Additional costs (TMI — taxes, maintenance, and insurance) average C$3.50–4.00/SF, bringing total occupancy costs to C$20–21/SF for average product. All dollar figures in this report are Canadian dollars unless otherwise noted.

Rent Trends: The Floor Is Forming

Average asking rents at C$16.49/SF represent a roughly 9% correction from the Q2 2024 peak of C$18.11/SF. But the decline has essentially stalled — the quarter-over-quarter movement from C$16.52 to C$16.49 is statistically negligible. This is the clearest signal yet that the rent correction has run its course.

What’s not visible in the headline data is the shift happening behind the scenes: landlord concessions are tightening, deal rates are inching closer to asking rates, and leasing velocity picked up meaningfully in Q4 2025 and carried into Q1 2026. Rents vary significantly by submarket — GTA West (Mississauga, Brampton, Milton) averages C$16.88/SF while GTA East (Ajax, Pickering, Oshawa) offers value at C$14.43/SF. Small-bay product under 25,000 SF continues to command premiums across all submarkets.

Construction Pipeline: The Setup for Tightening

The GTA construction pipeline tells one of the most compelling supply stories in North American industrial real estate. After peaking at 17.6 million SF in Q1 2023, active construction has fallen 52% to approximately 8.5 million SF. Projected 2026 deliveries of 7.3 million SF would be the lowest annual total since 2018.

More importantly, speculative development has nearly stopped. Developers are holding permits and requiring pre-leasing commitments before breaking ground — a dramatic shift from 2021–2022 when spec projects were the norm. Only about 36% of newly completed space was pre-leased prior to delivery, and less than 2.0 million SF of new projects beyond those already underway are expected to break ground and complete by year-end 2026.

The math is straightforward: with trailing absorption running positive and new supply at cycle lows, vacancy compression becomes increasingly likely through the back half of 2026 and into 2027.

Submarket Breakdown

GTA West (Mississauga / Brampton / Milton / Halton Hills)

The GTA’s logistics powerhouse. Mississauga alone has 181+ million SF of industrial inventory with unrivaled multimodal connectivity — direct access to Highways 401, 407, 410, and the QEW, plus proximity to Pearson International Airport and CN/CP intermodal terminals. Average asking net rent: C$16.88/SF with TMI of C$3.96/SF. Brampton (105+ million SF) saw vacancy edge to 6.3% with modest negative absorption of 50,000 SF in Q1. Milton and Halton Hills continue to attract large-format development. Toronto West recorded 1.8 million SF of quarterly net absorption in Q3 2025, demonstrating the submarket’s fundamental strength.

GTA East (Ajax / Pickering / Oshawa / Whitby)

The value play. GTA East offers the most competitive pricing in the metro at C$14.43/SF net (with TMI of C$3.72/SF), making it attractive for cost-conscious distribution operations. Direct Highway 401 access enables connectivity to Montreal, Toronto’s core, and GTA West. Q1 2026 leasing activity reached 950,000+ SF, highlighted by a landmark 470,000 SF transaction in Ajax. Asking sale prices average C$292/SF — the best value outside Hamilton.

GTA Central (Toronto / Vaughan / Markham)

The infill core. Limited land for new development keeps this submarket structurally tight, particularly for small-bay and multi-tenant product. Rents are at or above the metro average, and sublease availability has been declining. Urban industrial land in Toronto proper faces ongoing conversion pressure to residential and mixed-use development. Vaughan, with its Highway 400/407 positioning, remains a key node for last-mile and mid-market distribution.

GTA North (Newmarket / Aurora / Barrie Corridor)

An emerging corridor with growing appeal for distribution operations serving the GTA’s expanding northern suburbs. More affordable than the core GTA submarkets, with improving infrastructure and growing population base driving demand for service-oriented industrial space.

Co-Warehousing & Flexible Warehouse Space in Toronto

Toronto’s co-warehousing market benefits from the GTA’s massive immigrant-driven population growth and the resulting explosion in small business formation. The Toronto CMA absorbed more than a quarter of all new immigrants arriving in Canada in 2024 — every one of those newcomers creates downstream demand for goods, services, and the warehouse space that supports them.

Who’s leasing flexible space in Toronto: E-commerce entrepreneurs and DTC brands serving Canada’s largest consumer market, food and beverage businesses supporting Toronto’s diverse restaurant scene, construction and trades companies operating across the GTA’s booming residential development market, importers and distributors using Toronto as a Canadian entry point, and event and entertainment companies serving the region’s cultural institutions.

Browse available co-warehousing and small-bay warehouse listings on WareCRE’s Toronto marketplace.

Key Trends to Watch

1. CUSMA Renegotiation and Trade Uncertainty

The mandatory CUSMA review scheduled for July 2026 is the single biggest variable for GTA industrial demand. If renegotiations produce a less favorable trade framework, cross-border logistics volumes could shift — particularly for tenants whose operations depend on U.S.-Canada goods movement. Market participants have largely priced in current tariff levels, but a materially worse outcome could create a demand shock. Read our analysis of how trade dynamics are reshaping warehouse demand: How Tariffs Are Reshaping Warehouse Demand in 2026.

2. The Supply Cliff Creates a Window

Construction pipeline declining 52% from peak, speculative starts near zero, and 2026 deliveries headed to multi-year lows — this is the textbook setup for supply-driven tightening. The GTA has been here before: when construction slowed in the late 2010s, it created the conditions for the explosive rent growth and sub-1% vacancy of 2021–2022. The magnitude will likely be smaller this time, but the direction is clear. See our analysis: Small-Bay vs. Big-Box: What the Vacancy Gap Means for Tenants and Operators.

3. Small-Bay Structural Undersupply

The same trend playing out across North America is acute in the GTA: small-bay and mid-bay product under 25,000 SF is structurally undersupplied. Developers building in the GTA are focused on large-format logistics facilities, not multi-tenant small-bay product. Small-bay rents have held up better than the market average and will likely be the first segment to see rent growth resume.

4. Immigration-Driven Demand

Toronto’s population growth — driven by Canada’s immigration targets — is the structural demand engine that differentiates this market from most North American peers. More people means more consumer goods, more e-commerce, more last-mile delivery, and more warehouse demand. Even if cross-border trade volumes soften, domestic consumption continues to grow. This is why the GTA’s long-term industrial fundamentals remain among the strongest in North America. For broader context on industrial trends, see: Industrial Real Estate Trends & Outlook 2026.

Outlook: What to Watch in Q2–Q3 2026

The GTA industrial market is transitioning from correction to early-stage recovery. The key question isn’t whether the market tightens — the supply math makes that virtually certain — but how fast, and whether trade policy disruption delays the timeline.

Expect rents to stabilize and begin firming through mid-2026. The C$16.49/SF asking rate has effectively found a floor. Behind-the-scenes deal dynamics (tighter concessions, deal rates approaching asking) suggest the recovery is further along than headline data implies. Small-bay rents will lead the recovery.

Watch vacancy compression in the second half of 2026 as the pipeline empties. Institutional investors are already positioning for the tightening cycle — Class A product that would have been held indefinitely in 2021–2022 is now trading at attractive entry points.

The CUSMA review in July is the key risk event. A constructive outcome would accelerate the recovery; a disruptive one could extend the current plateau by 2–3 quarters. Either way, the supply-side fundamentals favor tightening over the medium term.

For tenants, the bottom line: This is the best leasing environment the GTA has offered in over five years. Rents are down, options are available, and landlords are competing for tenants. That window closes when the pipeline runs dry.

Data sources: Cushman & Wakefield Toronto Industrial MarketBeat Q1 2026, CBRE GTA Industrial Market Report Q4 2025, CBRE GTA Industrial Market Report Q3 2025, Colliers Canada National Industrial Report Q1 2026, Altus Group Toronto CRE Market Update Q1 2026, Newmark Toronto Industrial Market Report, WareCRE marketplace data (May 2026).