Canada Industrial Figures Q3 2025

Executive Summary

• While national net absorption remained modestly negative in Q3 2025, totaling -676,000 sq. ft., strong positive momentum was seen in Toronto and Edmonton that was offset by negative activity in Montreal and Waterloo Region.
• Availability rates continued to rise across every market with the exception of Edmonton, which remains the only market to have recorded a year-over-year availability rate decrease. In square footage terms, Montreal saw the largest quarterly increase in available space totaling 2.8 million sq. ft. in Q3 2025, largely consisting of sublease space.
• After dropping from peak levels three years ago, the national under construction pipeline has started to rise again and grew to 25.9 million sq. ft. in Q3 2025. While pre-leasing activity has been steadily improving, reaching 51.3% this quarter, there remains a substantial amount of available space set to deliver in the coming quarters.
• The national average asking net rental rate remains on its downward trend, decreasing 3.1% year-over-year to $15.11 per sq. ft. in Q3 2025.

Net absorption remains negative amid continued growth of available space

National net absorption was negative for the second quarter in a row, totaling -676,000 sq. ft. in Q3 2025.

While overall net leasing activity was modestly negative, strong positive momentum was seen in Toronto and Edmonton this quarter. However, this was offset by the negative net absorption recorded in Montreal and Waterloo Region.

For the remaining six of the ten tracked markets, net absorption was relatively muted for an overall quiet quarter.

Outside of the 1.2 million sq. ft. of pre-leasing activity on new supply that delivered this quarter, the Canadian industrial market saw 1.9 million sq. ft. of available space within existing inventory come to market on a net basis in Q3 2025.

Availability rates higher year-over-year for every market except Edmonton

The national availability rate rose further by 20 basis points (bps) quarter-over-quarter to 5.5% in Q3 2025. Cumulatively, this marks a 100 bps annual increase in national availability.

Availability has continued to trend higher across almost every market with the exception of Edmonton, which remains the only market to have recorded year-over-year decreases in availability rate for the last four quarters.

In square footage terms, Montreal saw the largest quarter-over-quarter increase in available space totaling 2.8 million sq. ft. in Q3 2025. Waterloo Region followed with its available space growing by 1.2 million sq. ft.

On a quarterly basis, availability rates rose the most in Ottawa, Waterloo Region and Montreal, with increases of 100 bps, 90 bps and 80 bps, respectively. Edmonton and London were the only markets with quarterly declines of 70 bps and 50 bps, respectively.

Influx of sublease space in Montreal lifts national total to new record high

National sublease space continued to grow in Q3 2025, rising by 512,000 sq. ft. quarter-over-quarter to a new record high totaling 15.0 million sq. ft.

The growth in sublease space in Q3 2025 was largely due to a significant jump in Montreal, that saw 2.1 million sq. ft. of new subleases become available.

If excluding the surge of sublease space in Montreal, the national level would have instead declined by 1.6 million sq. ft. quarter-over-quarter.

Year-over-year increases in sublet availability rates were recorded in Montreal, Ottawa and Waterloo Region that all rose by 40 bps in Q3 2025. Meanwhile, all other markets have seen their sublet availability rates decline or hold flat in Q3 2025.

Construction activity rises but design build projects begin to take precedence

Following last quarter’s jump, the pace of construction starts moderated with 4.4 million sq. ft. of new projects launching in Q3 2025.

In recent quarters, the share of speculative project starts has been shrinking and design build construction now makes up the majority of the quarterly starts accounting for 54.6% of the Q3 2025 total.

The largest portion of construction starts in Q3 2025 were by far for big box facilities located in Toronto, that totaled 2.1 million sq. ft. or 47.9% of all national starts.

After dropping from peak levels three years ago, the national under construction pipeline has started to rise again. With 25.9 million sq. ft. of space currently under construction, this will result in more new supply for the market to absorb in future quarters.

Pre-leasing strengthens in the development pipeline

Construction activity in Toronto continues to dwarf all other markets, with 9.9 million sq. ft. of space actively under construction. Notably, 6.6 million sq. ft. of this space remains available as of Q3 2025.

Outside of Ottawa, relative development activity remains healthy with each market currently building at less than 2.0% of their respective existing inventory.

Pre-leasing on the construction pipeline has been steadily improving over the last four quarters and has risen to its highest level in three years to 51.3% in Q3 2025.

The big box segment of the national construction pipeline totals 19.1 million sq. ft., however, over half of this space now has commitments in place.

New supply deliveries slow amid delays, on track to rebound over the coming quarters

New supply deliveries fell to 2.9 million sq. ft. in Q3 2025 as several project delays have pushed out expected delivery dates into the next couple of quarters.

Speculative projects accounted for 1.9 million sq. ft. of new supply and design build totaled 931,000 sq. ft. in Q3 2025.

Just over half of the quarter’s new supply was located in Toronto (50.1%) with the remaining space delivered in Vancouver (18.2%), Calgary (17.9%), Montreal (12.8%) and Waterloo Region (1.0%).

Pre-leasing levels on the new supply that delivered fell once again, dropping to 42.0% in Q3 2025 as most of the speculative space was delivered available.

New supply is on track to rebound with 15.6 million sq. ft. of space currently expected to deliver over the next two quarters.

National average net rents continue to contract

Overall asking net rents have remained on their downward trend, with the national average rate decreasing 3.1% year-over-year to $15.11 per sq. ft. in Q3 2025.

Rents have been steadily declining in the three largest industrial markets over recent quarters and weighed on the national average. In Q3 2025, Waterloo Region also recorded a 5.1% year-over-year decrease to its asking net rental rate.

Strong year-over-year rent growth continues to be seen in Halifax and Edmonton, with annual increases of 16.2% and 9.8%, respectively.

On a quarterly basis, the national average net asking rent decreased by 1.6% or $0.25 per sq. ft. in Q3 2025. Seven of the ten tracked markets saw quarter-over-quarter rent declines, led by Waterloo Region (-4.3%), Montreal (-2.7%) and Toronto (-2.0%).

Average sale prices are holding relatively flat

The national average asking sale price has continued to hold near the $310 per sq. ft. mark, declining marginally year-over-year by 1.7% to $309.48 per sq. ft. in Q3 2025.

Cumulatively since peaking at $327.62 per sq. ft. in Q3 2022, the national average asking sale price has decreased by only 5.5%.

Winnipeg and Halifax recorded the largest year-over-year growth in asking sales prices, increasing 18.7% and 8.3%, respectively.

On a quarterly basis, average asking sale prices held relatively flat across half of the markets in Q3 2025. London saw the largest quarter-over-quarter decrease in sale prices of 5.5% and Winnipeg recorded the greatest quarterly increase of 7.0%.