GTA Industrial Vacancy Falls to 2.2% as Absorption Rebounds

GTA industrial vacancy declined to 2.2% in Q2 2026 after peaking at 2.9% in late 2025. Demand is improving, but rents remain below their 2023 high as new supply continues to shape tenant decisions.

The GTA industrial market entered the second half of 2026 with vacancy at 2.2%, down from 2.5% in Q1 and the recent peak of 2.9% recorded in Q3 and Q4 2025. Net absorption reached approximately 3.5 million square feet in Q2, confirming a second consecutive quarter of improving occupancy conditions. The West market, including Brampton and Mississauga, recorded vacancy of 2.3% after reaching 3.3% in Q3 2025. These figures indicate that leasing demand is beginning to absorb the supply delivered during the market correction, although conditions remain more balanced than during the 2021 to 2023 expansion.

Net asking rents were approximately $16.22 per square foot in Q2 2026, down from the GTA peak of $18.57 per square foot in Q3 2023. The decline represents a correction of roughly 13% from the peak, while CBRE reported that Toronto rents were down 3.1% year over year in Q3 2026. Toronto also received 2.4 million square feet of new supply during Q3, representing 45.1% of national deliveries and keeping landlords under pressure to compete on incentives, functionality, and possession timing. Small and mid bay assets remain comparatively well positioned because their broader tenant base supports more consistent leasing demand than large distribution facilities.

Investment conditions are improving alongside the operating recovery, with Toronto investment volume reaching $669.2 million in Q2 2026 and national industrial investment volume reaching $4.2 billion. The available data does not establish a reliable GTA industrial cap rate for the third quarter, so underwriting should rely on asset specific evidence rather than a single market benchmark. National industrial net absorption accelerated to 10.3 million square feet in Q3, the strongest quarterly result since Q4 2022, while national availability declined to 5.2%. CoStar expects absorption to average 7.5 million square feet per quarter from Q3 2026 through 2027, supporting a potential return to positive rent growth by late 2027 if economic and trade conditions remain stable.