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Industrial market rebalances as vacancy hits five-year high and construction slows
The Toronto industrial market is undergoing a rebalancing following two years of robust development. Vacancy rates rose for the ninth consecutive quarter, reaching a five-year high of 3.1% by year-end—a 160-basis-point (bps) increase compared to the previous year. Year-end deliveries exceeded 18.9 million square feet (msf), nearly 7.2 msf above the five-year average. However, this growth cycle appears to be winding down, as the Toronto construction pipeline has contracted by over 58.5% compared to last year, leaving just 9.4 msf still under development. This reduction places the current pipeline below the five-year average level of 14.7 msf, signaling the end of the pandemic-era construction boom.