Q3 2023 Toronto Industrial Market Report

The industrial market for the third quarter of 2023 continues to see vacancy rates of sub-one percent levels, while availability continues to sit at 1.6 percent. Lease rates, quarter-over-quarter, increased marginally by 1.3 percent, and the average asking rents have remained relatively consistent at $18.57 per square foot.

Signs of a softening market are beginning to appear, with demand cooling off, and deals taking longer to be completed. The market appears to be waiting to see if the Bank of Canada moves its rates as the last rate increase resulted in a decrease in the number of transaction and price.

The greater Toronto population is growing fast, with the region’s dynamic growth providing the platform for continued growth. The region’s strategic location makes it a key hub for logistics, distribution, and manufacturing.

Looking ahead, vacancy rates are anticipated to start slowly climbing. Developers don’t want to flood the market with supply, particularly as demand is showing signs of cooling, resulting in some developers halting new projects. Further, a small increase in availability is expected as new space is slated to hit the market in 2024, resulting in rental rates leveling off.

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