Canada’s industrial real estate markets on different trajectories
Some regions are more acutely affected by ongoing trade disruptions while others are showing greater resilience
By Shantaé Campbell, Published Feb 27, 2026
Canada’s industrial real estate markets are advancing at an uneven pace, with some regions more acutely affected by ongoing trade disruptions and others showing greater resilience, according to Royal LePage’s 2026 Commercial Real Estate Report.
Year-end data from the company show conditions eased across several major markets in 2025, while others — particularly Calgary — continued to post rising rents despite higher vacancy rates, pointing to a widening divergence by region and asset type.
In the Greater Toronto Area, industrial asking rents fell 4.9 per cent in 2025 to $21.88 per square foot, while vacancy rose to 3.4 per cent from 2.9 per cent a year earlier.
Downtown Toronto recorded a sharper year-over-year increase in vacancy, rising to 2.1 per cent, marking a pullback from the exceptionally tight conditions seen during the pandemic.
Calgary, meanwhile, followed a different trajectory.
“We’re still seeing vacancy in the three to four per cent range, which is a very tight market,” said Maxine Morrison, an industrial real estate executive with Royal LePage in Calgary. As new industrial space is delivered, she said, availability can increase modestly without easing pressure on rents because demand remains strong.
Rising construction costs have reinforced that dynamic. “Tariffs are increasing the cost to build, particularly because commercial construction relies heavily on steel,” Morrison said, adding that higher build costs have flowed through to operating costs and rents without materially slowing leasing activity.
She said Calgary’s industrial demand has broadened beyond traditional warehouse and energy-sector uses, with logistics, data centres and hybrid industrial-retail formats increasingly absorbing space. Morrison added that non-traditional users, including recreational operators such as indoor volleyball and pickleball facilities, have also taken up industrial space that might otherwise have sat vacant.
Data from the Greater Toronto Area industrial market suggest the divergence reflects timing and structure rather than a uniform downturn, according to Colliers. Gord Cook, vice-chairman at Colliers, said higher interest rates softened industrial demand through 2023 and 2024, while tariff uncertainty delayed a recovery that began to take shape late last year.
“We were quite bullish going into 2025, but the tariff narrative really cooled the market and postponed the recovery we started to see in late 2024,” Cook said.
That pause gave way to a rebound at year-end. “We saw a strong rebound in net absorption in the fourth quarter of 2025, one of the strongest quarters we’ve seen in more than three years,” Cook said.
“The bigger issue is long-term supply,” Cook said, noting that the rents required to justify new construction remain well above current market rents, keeping development muted into 2026 and 2027.
Early signs of tightening are already appearing in less visible metrics. “We’re seeing incentives contract in core markets,” Cook said, referring to reduced free rent and tenant inducements, which often precede firmer pricing.
Office leasing activity has continued, but demand has been driven by tenant relocation rather than expansion, keeping overall space requirements constrained.
“Employers are placing greater emphasis on how space is used rather than how much space they take up,” said Matt Jacques, interim general manager of Royal LePage Commercial.
www.financialpost.com/real-estate/property-post/canada-industrial-real-estate-markets-different-trajectories
