Canada Industrial Figures Q4 2025

Executive Summary

• Annual net absorption rose to 8.7 million sq. ft. in 2025, a significant increase over 2024, but continues to lag the 15-year pre-pandemic average annual pace of 18.2 million sq. ft. While pre-leasing on new supply accounted for much of the net absorption in 2025, a few markets also saw positive net leasing on top of their pre-leasing activity.
• The national availability rate rose 10 bps to 5.6% in Q4 2025, for a cumulative annual increase of 70 bps which is substantially smaller than the increases seen over the prior two years. Availability rates in nearly all markets are higher year-over-year with the exception of Calgary, which was the only market where its availability rate decreased in 2025.
• Construction fundamentals have improved in 2025, with a shrinking development pipeline and growing prevalence of design build project starts. Meanwhile, pre-leasing levels have steadily strengthened in both new supply as well as in the current active pipeline.
• The national average net rent declines for the second consecutive year to $14.91 per sq. ft. in 2025, however, the pace of annual decrease is moderately lower relative to 2024.

Net absorption rises on the back of stronger pre-leasing

National net absorption jumped in Q4 2025 to 5.9 million sq. ft., largely driven by 5.3 million sq. ft. of pre-leasing on the new supply that delivered this quarter.

Quarterly net absorption was led predominately by Toronto totaling 4.3 million sq. ft. followed distantly by Calgary at 1.9 million sq. ft. in Q4 2025. Both markets also recorded strong positive net leasing in addition to their respective pre-leasing driven activity.

National annual net absorption totaled 8.7 million sq. ft. in 2025, a significant increase over the 2.3 million sq. ft. in 2024 but still lags the 15-year pre-pandemic average annual pace of 18.2 million sq. ft.

Toronto, Calgary and Edmonton were the only three markets that recorded positive annual net leasing activity in 2025 beyond their respective pre-leasing for the year.

Calgary availability rate drops as national increase slows in 2025

The national availability rate rose marginally by 10 basis points (bps) quarter-over-quarter to 5.6% in Q4 2025.

Over 2025, the national availability rate rose by 70 bps, a substantially smaller annual increase compared to the average 165 bps increase seen over the preceding two years.

Availability rates in most markets recorded quarter-over-quarter increases led by London (+190 bps) and Vancouver (+70 bps). This was offset by quarterly decreases in Calgary (-80 bps) and Toronto (-10 bps).

Calgary is the only Canadian market where availability rates decreased year-over-year, dropping by 50 bps. In all other markets availability rates rose, led by London, Ottawa and Waterloo Region.

In square footage terms, national available space grew by 14.0 million sq. ft. in 2025. This was led by Montreal and Toronto where available space increased by 5.0 million sq. ft. and 3.5 million sq. ft., respectively.

Sublease space rises to new record high in 2025

Sublease space rose to a new record high of 15.1 million sq. ft. after a modest quarter-over-quarter increase in Q4 2025, holding the national sublet availability rate flat at 0.7%.

Sublets in Q4 2025 make up the largest proportion of total available space in Calgary (17.4%), Vancouver (17.0%), Ottawa (16.4%), and Edmonton (15.2%).

National sublease space grew by 1.5 million sq. ft. in 2025, predominately driven by the increase in Montreal that came as the result of a large occupier exiting the market. In fact, if excluding Montreal, national sublease space would have instead decreased by 426,000 sq. ft. in 2025.

The largest increases to sublet availability rates were seen in Montreal and Ottawa where they rose by 50 bps and 30 bps, respectively.

On the other hand, sublet availability rates eased the most in London with a 30 bps year-over-year decrease.

Design build projects take over shrinking construction pipeline

Construction starts rose slightly in Q4 2025 with 5.1 million sq. ft. of new projects, consisting primarily of design build facilities.

Most of the new developments this quarter were design build, big box properties located in Calgary and Toronto that accounted for a combined 59.1% of the starts in Q4 2025.

The pace of construction starts has continued to slow in Canada, with the annual quarterly average in 2025 decreasing for the third year in a row.

After last quarter’s increase, the national under construction pipeline resumed its downward trend and eased to 22.0 million sq. ft. in Q4 2025.

Design build projects have been growing in prominence and, in Q4 2025, took over as the leading construction project type, now making up 50.8% of the active pipeline.

Pre-leasing continues to show signs of improvement

The national construction pipeline remains conservative with development equating to just 1.1% of total existing inventory.

Nearly all markets are currently building at less than 2% of inventory except for Calgary and Ottawa. However, design build projects make up most of the pipeline in both markets, resulting in high levels of pre-leasing.

The overall pre-leasing rate on the national construction pipeline continues to improve, rising further in Q4 2025 to 55.4% to its highest level since Q2 2022.

While big box projects remain the largest segment of the construction pipeline in terms of size at 16.4 million sq. ft., pre-leasing on this space has been steadily improving and rose to 62.3% in Q4 2025.

Annual new supply deliveries slow to lowest level in five years

New supply deliveries jumped to 9.0 million sq. ft. in Q4 2025, lifted by several delayed projects that had carried over from the prior quarter.

Speculative projects located in Toronto accounted for a significant portion of the new supply deliveries in Q4 2025, totaling 3.9 million sq. ft.

Since reaching a trough one year ago, pre-leasing activity has steadily improved over 2025 and rose to 59.4% within Q4 2025 deliveries, its highest level in over two years.

New supply in 2025 totaled 23.4 million sq. ft., representing a sharp 38.8% drop year-over-year to its lowest national level in five years.

Toronto recorded the most amount of new supply over 2025, accounting for 47.6% of all the space delivered this year. This was followed distantly by Vancouver that received 18.2% of the national new supply in 2025.

New supply is expected to ease with a total of 9.1 million sq. ft. of deliveries projected over the next two quarters.

Pace of annual rent decline moderates slightly in 2025

The national average asking net rental rate further contracted in 2025, decreasing 3.5% year-over-year to $14.91 per sq. ft. in Q4 2025.

This marks the second year in a row of annual national rent decreases, however, the pace has slightly moderated compared to 2024. Cumulatively, the national average net rent has fallen by 8.4% since its peak in Q3 2023.

Six markets recorded annual rent contraction in 2025, led by Waterloo Region and the three largest industrial markets in Canada.

Rent growth was strongest in Halifax, which is the only market to have consistently recorded increases every quarter over the last two years.

On a quarterly basis, the national average net rent has declined or held flat for the last 10 consecutive quarters.

Sale prices flat year-over-year due to base effects

While the national average asking sale price recorded a marginal year-over-year increase in 2025 to $308.96 per sq. ft., this was due to base effects where prices from one year ago were temporarily depressed.

Looking at the overall trend since 2023, national average sale prices have been steadily declining. Cumulatively over the last two year period, national sale prices have dropped by 5.2% in 2025.

Out of the five markets that recorded year-over-year growth in sale prices in 2025, only Winnipeg, Waterloo Region and Edmonton’s increases were not subject to base effects and are higher over a two year period.