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Canada Industrial Figures Q2 2025

July 2, 2025

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Trade-induced uncertainty lifts availability as weaker demand overshadows improving pre-leasing activity

Executive Summary

  • National net absorption turned negative for the second time in five years as uncertainty in the market has weakened short term demand fundamentals. Despite 3.7 million sq. ft. of pre-leasing on new supply, available space within existing stock also grew by 5.1 million sq. ft. in Q2 2025.
  • The national availability rate continues to trend modestly higher, rising 40 bps quarter-over-quarter to 5.3% in Q2 2025 and is closely approaching the 10-year historical average rate of 5.6% from 2007-2016.
  • A strong rebound in construction starts in Q2 2025 was mostly offset by project completions, holding national construction activity at 1.1% of current inventory. Notably, pre-leasing activity has trended modestly higher in recent quarters across both new supply as well as the current active pipeline.
  • Asking rents in the three largest markets continue to drag on the national average, driving a modest 3.2% year-over-year decline to $15.37 per sq. ft. in Q2 2025.


Net absorption returns to negative territory amid trade-induced uncertainty

National net absorption turned negative for the second time in five years and totaled -1.4 million sq. ft. in Q2 2025.

Markets continue to cite business and economic uncertainty stemming from the ongoing trade war which has weakened short-term demand fundamentals.

While leasing activity in Q2 2025 was buoyed by 3.7 million sq. ft. of pre-leasing on the new supply that delivered this quarter, available space within existing stock had also increased by 5.1 million sq. ft.

Negative net absorption this quarter was seen across almost every market except in Calgary, which had 100% pre-leasing on its new supply, and Vancouver, which recorded modest positive net absorption.



Availability rate nears pre-2017 historical norms

The national availability rate continued its upwards trend in Q2 2025, rising 40 basis points (bps) quarter-over-quarter to 5.3%. This lifts the national availability rate to within 70 bps of its 10-year historical average of 5.6% from 2007 to 2016.

In square footage terms, available space across Canada grew by 8.5 million sq. ft. quarter-over-quarter in Q2 2025. Toronto accounted for the majority of the additional available space totaling 5.1 million sq. ft.

Every market recorded higher availability rates year-over-year aside from Edmonton, which remains the only market to have seen an annual contraction.

On a quarterly basis, Waterloo Region and Ottawa had the largest increases in availability rates, rising 90 bps and 70 bps, respectively. Meanwhile, Calgary was the only market to record a quarterly decline of 20 bps in Q2 2025.



Sublease space ticks higher to new record level

After modestly declining for three consecutive quarters, national sublease space rose again to a new record high of 14.4 million sq. ft. in Q2 2025.

As a result, the national sublet availability rate grew 10 bps quarter-over-quarter to 0.7%, matching the historical high.

Space available for sublet in Toronto and Waterloo Region both reached new record highs in Q2 2025 of 6.8 million sq. ft. and 818,000 sq. ft., respectively.

Sublet availability rose the most year-over-year in Waterloo Region, increasing by 30 bps in Q2 2025. Notable declines were seen in Alberta with 30 bps and 20 bps decreases in Calgary and Edmonton, respectively.



Speculative project starts likely to lift availability rates higher

Construction starts rebounded from a quiet Q1 2025 and rose to 8.0 million sq. ft. of new projects that launched in Q2 2025. Notably, Amazon’s third distribution facility in the Ottawa market single-handedly accounted for 3.1 million sq. ft. of the total starts.

Toronto and Montreal also recorded a surge of new construction starts in Q2 2025, with 2.4 million sq. ft. and 1.3 million sq. ft., respectively, of new development kicking off in the quarter.

Aside from Ottawa’s Amazon design build facility, construction starts were predominantly speculative projects totaling 3.9 million sq. ft. in Q2 2025. Given current market conditions, this is expected to result in higher availability rates before stabilizing.

Project completions mostly offset construction starts in Q2 2025, leading to a slight 2.5% quarterly increase in the overall under construction pipeline to 23.4 million sq. ft. This has kept national construction activity steady at 1.1% of current inventory.



Pre-leasing activity begins to trend higher again

Toronto and Vancouver continue to lead construction activity in Canada, now joined by Ottawa as a result of its new Amazon distribution centre project. Combined, the three markets account for 69.7% of total active construction.

Pre-leasing within the under-construction pipeline has moderately trended higher over recent quarters, rising to 47.5% in Q2 2025.

Speculative projects continue to account for most of the space actively under construction, representing 63.9% of the total and design build making up the remaining 36.1%.

The big box segment remains by far the largest component of the construction pipeline, accounting for 16.6 million sq. ft. of the total in Q2 2025.

At its current level of pre-leasing, big box construction on its own represents a potential 40 bps impact to the national availability rate.



New supply on track to start winding down

New supply in Q2 2025 increased to 7.1 million sq. ft. of project completions, marking the second highest Q2 of deliveries seen this development cycle. 

Much of the new supply in Q2 2025 was delivered in Toronto which accounted for 58.4% of the total. Vancouver and Calgary distantly followed with 10.7% and 10.4% of the new supply, respectively. 

Notably, the pre-leasing rate on new supply has improved from its recent low and risen above 50% for the first time in five quarters to 52.9% in Q2 2025.

Stronger pre-leasing activity was particularly evident in the Alberta markets, Waterloo Region and Montreal which all saw high levels of pre-leasing on new supply in Q2 2025.

Looking ahead, another 12.5 million sq. ft. of new supply is expected to deliver over the course of H2 2025. Barring more material increases in construction starts, new supply will be on track to start winding down later this year and in 2026. 



Rent growth persists in select markets

National average asking net rents continued to decline modestly, decreasing 3.2% year-over-year to $15.37 per sq. ft. in Q2 2025.

Rents in all three of the largest industrial markets have been declining for five consecutive quarters and have been the main drags on the national average.

Otherwise, solid rent growth continued to be seen in half of the markets in Q2 2025, led by Halifax with the largest year-over-year increase in Canada.

On a quarterly basis, the national average asking net rent declined 0.6% or $0.09 per sq. ft. in Q2 2025. Quarterly rent growth of 4.5% and 2.5% were noted in Edmonton and Halifax, respectively. Meanwhile, the largest quarter-over-quarter rent decreases were seen in Toronto and Montreal at -1.2% and -1.1%, respectively.



Sale prices rise slightly for the first time in two years

The national average asking sale price rose year-over-year for the first time in eight quarters, albeit a marginal increase of 0.5% to $315.90 per sq. ft.

While year-over-year price declines were noted in Vancouver and Ottawa, eight of the ten markets recorded either flat or positive sale price growth in Q2 2025.

Winnipeg continues to see the largest year-over-year growth in sale prices, rising 18.6% in Q2 2025. Montreal and Halifax also saw strong annual price growth of 9.8% and 8.3%, respectively.

On a quarterly basis, Montreal and London saw solid increases to their sale prices that rose 6.5% and 6.3% in Q2 2025, respectively.



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