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Market Report

Toronto Industrial Market Report

2Q 2023

New Supply Provides Optimism for Tenants;
Fundamentals to Remain Extremely Healthy

Demand persists, despite signs of rising vacancy. The surge in e-commerce, coupled with limited supply, caused Toronto’s industrial market to experience 10 consecutive quarters of sub-1 per cent vacancy. As of the end of 2022, vacancy reached a historic low of 0.5 per cent. New supply, however, could provide some relief to occupiers, as a historic level of new deliveries are planned for completion this year. As a result, tenants have begun taking a wait-and-see approach in the hopes that rental rates begin to level off. Consequently, vacancy rose in the first quarter of the year, which has not been witnessed since 2020. Nonetheless, space demand continues to persist and remains healthy. With Toronto being Canada’s largest city, e-commerce activity will likely remain above 2019 levels as retailers have adapted to changing consumer behaviour, and a larger demographic is now familiar with online shopping. Additionally, as many companies attempt to mitigate supply chain risks, nearshoring — which brings manufacturing closer to home — may also act as a new demand source.
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