The Greater Toronto Area (GTA) industrial market remains resilient. In the past two years, industrial has been the sweetheart asset class – strengthened by limited supply and relentless demand that has seemed endless. But flattening growth may be on the horizon as some of the largest users begin to reach near-peak growth.

The logistical pipelines for some of the largest retailers are nearing completion and their appetite for space is being quenched. With 60 million square feet (msf) in the development pipeline for the next three years, rising availability will likely provide more space options to a broader spectrum of industrial tenants compared with today’s constrained supply environment.

From a high of 7.1% in first-quarter 2010, the GTA industrial availability rate has dropped steadily to the current historic low of 0.9%.

Rental rates have grown by 17% in 2021 alone, 61% in the past three years, and 75% in the past five years. Low availability rates have offset the high land values and construction costs evident in today’s market. Given the supply-demand imbalance, the consensus is for continued growth across the GTA industrial market for the foreseeable future.

In 2021, 10.2 msf was delivered across 49 buildings. At year-end, 14 msf was under construction across 70 buildings, of which 45% had already been leased. Buildings under construction equate to a mere 1.6% of the GTA’s existing industrial stock. Projects currently under construction are split between design-build (32%) and speculative (68%) developments. Pre-construction developments total 53 msf in 149 buildings across the GTA. The GTA West leads the way with 59% of pre-construction opportunities, followed by 23% in the North, 10% in Central and the East market with 8%.