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Market Report

Toronto Industrial Market Report

4Q 2023

Influx of Supply Provides Some Tenant Relief;
Rent Growth to Remain Elevated

Vacancy edging higher amid increasing new supply. Since the Greater Toronto Area’s industrial vacancy rate hit 0.5 per cent at the end of 2022, available space has remained scarce. However, a surge in completions is gradually lifting the metro’s vacancy rate this year — providing some relief to tenants — which ended the third quarter at 1.1 per cent. On a trailing 12-month basis, completions topped 15 million square feet in September, a near-100 per cent yearly increase. This acceleration in inventory expansion was driven by exceptionally strong demand from the fast-growing e-commerce and third party logistics industries, as well as supply chain onshoring throughout the global health crisis. Consequently, the metro is experiencing an increase in speculative developments with no pre-leasing secured, as builders remain confident that new space will be absorbed quickly when leasing starts. Inventory is forecast to increase 1.7 per cent in 2023, with a large share of completions being concentrated in Mississauga, Oakville and Brampton.

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