Canada Industrial Figures Q1 2026

Executive Summary

• National leasing momentum carried over into Q1 2026 with 4.2 million sq. ft. of net absorption, which was nearly double the trailing three-year average pace. However, activity was largely driven by two markets, and a weaker economic outlook could present a challenge for leasing demand going forward.
• While the national availability rate plateaued in Q1 2026 and held at 5.5%, some markets have potentially reached an inflection point as six of the 11 tracked markets recorded flat or decreasing availability quarter-over-quarter.
• The construction pipeline remains in the mid-20 million sq. ft. range as project starts hold steady with 5.6 million sq. ft. launching in Q1 2026. Speculative construction rebounded across multiple markets and made up 61.9% of all new project starts this quarter.
• The national average net asking rental rate continues to steadily trend lower, decreasing 3.7% year-over-year to $14.91 per sq. ft. in Q1 2026. But on a quarterly basis, rent growth was seen in six of the 11 tracked markets.

Net absorption holds above recent pace but largely driven by two markets

Leasing momentum carried over into Q1 2026 with national net absorption totaling 4.2 million sq. ft., which was nearly double the trailing three-year average pace.

National net absorption was largely driven by Toronto and Waterloo Region in Q1 2026, as most markets recorded relatively subdued net leasing activity over the quarter.

In Toronto, over 1.6 million sq. ft. of net leasing activity occurred in existing stock. While most of the net absorption in Waterloo Region came from pre-leasing on new supply, the market did also record an additional 317,000 sq. ft. of positive net absorption.

Pre-leasing on new supply accounted for 2.2 million sq. ft. or 52.8% of the positive net absorption in Q1 2026.

Despite persistent economic uncertainty, leasing demand has so far remained relatively resilient. However, a weaker economic outlook may present a challenge for leasing demand going forward.

Availability rate plateaus and nears inflection point

The national availability rate plateaued in Q1 2026, holding steady at 5.5% and signaling potential inflection points in some markets.

This leaves the national availability rate currently at around the same level as where availability previously stabilized in 2014 to 2016.

On a year-over-year basis, every market has seen availability rates rise, with the exception of the Alberta markets Calgary and Edmonton that recorded the only decreases in Q1 2026.

The year-over-year rise in availability rates was greatest in London with a 220 bps increase in Q1 2026, followed by Ottawa and Vancouver that both recorded 150 bps increases. 

However, on a quarterly basis, six of the 11 tracked markets saw availability rates hold flat or decrease in Q1 2026.

Sublet availability rate continues to hold steady

Space for sublease continues to tick slightly higher, increasing 172,000 sq. ft. in Q1 2026 to a new record high total of 15.3 million sq. ft.

Most of the sublease space is located in Toronto and Montreal, which combined account for 63.7% of the national total.

Overall, the national sublet availability rate has remained stable for the past nine quarters, holding around its current level of 0.7%.

On a quarter-over-quarter basis, Toronto added the most sublease space in Q1 2026 with 796,000 sq. ft. of net new sublets. This was mostly offset by decreases in Vancouver (-651,000 sq. ft.) and Calgary (-131,000 sq. ft.).

Surge of speculative projects launch in Q1 2026

Construction starts largely held steady quarter-over-quarter with another 5.6 million sq. ft. of new projects launching in Q1 2026.

The bulk of the construction starts were in Toronto (1.8 million sq. ft.), Vancouver (1.4 million sq. ft.) and Calgary (1.1 million sq. ft.), which combined accounted for 76.0% of all starts in Q1 2026.

The recent trend of the increasing prevalence of design build starts reversed in Q1 2026, with a rebound in speculative construction across multiple markets that made up 61.9% of all new projects. In contrast, speculative construction had averaged 36.8% of starts in the second half of 2025.

The total construction pipeline rose slightly by 3.9% quarter-over-quarter to 24.8 million sq. ft. in Q1 2026, keeping the level of active projects within the mid-20 million sq. ft. range of the last few quarters.

Within the active pipeline, design build projects currently account for 51.6% of total construction activity.

Construction levels remain healthy in every market

Overall construction activity remains relatively low across every market in Q1 2026. Aside from Ottawa, each market is currently building at less than 3% of their respective inventory.

Meanwhile, Ottawa’s development pipeline is 95.5% pre-leased and will have a marginal impact on availability.

As a result, the national construction pipeline continues to be conservative with development representing just 1.2% of total existing inventory.

Overall pre-leasing levels on the total construction pipeline eased slightly quarter-over-quarter to 54.6% in Q1 2026.

Large bay projects accounted for a greater share of the pipeline in Q1 2026, rising 8.8% quarter-over-quarter to 19.5% of total construction.

Pre-leasing on new supply falls as more speculative projects deliver

New supply was marginally lower year-over-year by 0.4% with 4.5 million sq. ft. of completions in Q1 2026.

Toronto recorded the largest amount of new supply in Q1 2026, accounting for 40.9% of the national total followed by Waterloo Region with 20.0%.

Speculative projects continue to make up a large part of new supply, accounting for two-thirds of the deliveries in Q1 2026. Of which, 1.5 million sq. ft., or just over half, were in Toronto.

Pre-leasing activity on new supply deliveries fell below the 50% mark again in Q1 2026 to 48.7%. This comes largely as a result of over 3.0 million sq. ft. of speculative projects completing at just 23.0% pre-leased.

Over the next two quarters, 13.0 million sq. ft. of new supply is expected to deliver with 31.9% in Toronto and 26.2% in Ottawa.

National net rent continues decline but more markets seeing quarterly growth

The national average net asking rental rate continues to trend lower and declined 3.7% year-over-year to $14.91 per sq. ft. in Q1 2026.

Rent decreases in the three largest markets continue to weigh on the national average, but declines in Waterloo Region, Ottawa and Calgary also contributed in Q1 2026.

On a quarter-over-quarter basis, while the national average net rent decreased 0.2%, rent growth was seen in six of the 11 tracked markets in Q1 2026.

Quarterly rent growth was led by London, Waterloo Region and Victoria that increased 3.5%, 2.9% and 2.3%, respectively.

Sale prices start to tick higher in select markets

The national average asking sale price has effectively remained flat year-over-year, recording a 0.3% increase to $317.09 per sq. ft. in Q1 2026.

At the market level, sale price dynamics were varied with a near equal split of markets recording year-over-year price growth as there were decreases.

Winnipeg continues to lead year-over-year sale price growth in Canada and has done so for the last six consecutive quarters.

On a quarterly basis, modest sale price increases were recorded in Toronto (+2.6%), Calgary (+2.3%), Montreal (+2.3%) and Edmonton (+0.5%).

Local Market Insights

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