Southwestern Ontario Industrial Market Report

Vacancy rising as market absorbs new supply. As a major manufacturing and logistics hub in Eastern Canada, Southwestern Ontario has felt the impact of slowing economic activity. While the metro has largely avoided an outright decline in space demand, newly completed projects are taking longer to lease, resulting in sluggish net absorption and a sharp rise in the vacancy rate. Despite this metrowide trend, market conditions vary across regions. In Hamilton and London, a vacancy rate of approximately 8.0 per cent in the final quarter of 2024 signalled some oversupply and a tenant-friendly market. On the other end, Guelph and St. Catherines – regions that have seen little supply growth – maintained a sub-2.0 per cent vacancy rate. Looking ahead, leasing velocity is expected to increase this year, as falling borrowing costs stimulate consumer and business spending over the latter half of 2025. Southwestern Ontario’s trade capacity with the United States could also increase amid the completion of the Gordie Howe Bridge and ongoing nearshoring efforts, especially in advanced manufacturing. Nevertheless, with completions remaining elevated, vacancy is forecast to continue rising. Additionally, potential U.S. tariffs could pose a risk to demand-side dynamics.