SW Ontario Industrial Market Report

Vacancy rate drifting higher as demand normalizes. Consistent with the national trend, the industrial vacancy rate in Southwestern Ontario is currently on an upward trajectory. A historic amount of new supply is taking longer to be absorbed, due to a slowdown in space demand caused by elevated interest rates. Softening demand, along with ongoing supply growth, is expected to persist for the remainder of the year, likely pushing the vacancy rate above 3.0 per cent. However, this factor will open up more opportunities for future tenants, who previously struggled to find available space when vacancy rates dropped below 1.0 per cent between 2021 and mid-2023. With rents roughly 30 per cent below that in Toronto, the metro also offers lower-cost options to those who have been priced out of the GTA market.