Market Report
Southwestern Ontario Industrial Market Report
2026 Investment Forecast
Conflicting Forces to Define
Industrial Market Trajectory in 2026
Vacancy to level off with improving demand towards year-end. Despite higher tariffs and uncertainty, net absorption remained positive for most of 2025. Strategic stockpiling in anticipation of tariffs and relocations by some tenants from the neighbouring GTA in search of lower rents helped sustain leasing activity. The metro’s high concentration of food and agri-processing operations — industries that tend to be recession-resistant — also supported space demand. Even so, as the U.S. raised tariffs on steel products in June 2025 and on non-USMCA-compliant imports from Canada in August 2025, pressure on space demand intensified in the third quarter as net absorption turned negative. Looking ahead, the metro will contend with two opposing forces shaping its industrial market. Tariff risks are expected to continue weighing on absorption in the near term. This drag may be offset later by renewed momentum from lower interest rates and a potential improvement in U.S. trade. Over the long term, the metro could benefit from policies that encourage domestic production and reinvestment, including the federal Building Canada infrastructure initiative and Buy Canadian procurement measures that prioritize local suppliers.
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