Canada’s national industrial vacancy rate rose 70 basis points (bps) over the course of 2025, reaching 5.5 per cent as the fourth quarter closed out, but the year also saw nearly 6.9 million square feet of positive absorption. Newly released stats from Cushman & Wakefield show a year-over-year decline in the average net asking rent across the 16 regional markets the firm surveys — slipping to $15.11 per square foot (psf) from $15.81 in Q4 2024 — in tandem with a year-over-year jump in leasing activity.
An influx of 23 million square feet of new industrial space is a drop from the record high 35.5 million square feet of new completions in 2024. About 18 million square feet is currently in progress, with most expected to be delivered to the market by the end of 2026. Overall, Cushman and Wakefield analysts suggest the year ended on a more upbeat note than might have been envisioned in Q1 2025, but they caution that low pre-lease levels in the pipeline could loosen the vacancy rate over the coming months.
“Although vacancy edged up slightly on a quarter-over-quarter basis throughout 2025, the increase was modest — just 10 bps each quarter since Q2 2025 — reflecting a broadly steady environment across major markets,” they observe. “Most projects currently under construction are slated for delivery by year-end 2026, with the prelease rate sitting at 20.9 per cent. While additional leasing is expected, if activity stalls, this incoming supply could exert upward pressure on the overall industrial vacancy rate.”
Among the largest markets, Calgary was alone in experiencing tightening vacancy, as a 70 bps year-over-year drop took the rate down to 5.1 per cent. Nearly 3 million square feet of absorption occurred in a year when more than 2.3 million square feet of new industrial supply came onto the market. Meanwhile, average net asking rent slipped to $10.48 psf, from $10.79 one year earlier.
Toronto recorded nearly 6.5 million square feet of absorption (after 2.7 million square feet of negative absorption in 2024), but the year-over-year vacancy rate rose 50 bps, to reach 5 per cent, as 11.3 million square feet of new inventory came onto the market. Average net asking rent slipped to $16.57 psf, down from $17.33 psf in Q4 2024.
Montreal’s vacancy rate hit 7.6 per cent, up 130 basis from 12 months earlier, as it recorded a second consecutive year of negative absorption. In 2025, nearly 5.3 million square feet of industrial inventory emptied out — a smaller glut than the 6.8 million square feet returned to the market in 2024. About 1 million square feet of new supply was added last year, with about 915,000 square feet currently in the construction pipeline. Average net asking rent dipped to $14.60 psf from $14.81 psf in Q4 2024.
Vancouver enjoys the lowest vacancy rate (4.5 per cent) and highest average net asking rent ($19.99 psf) of the four markets. However, that’s a 120 bps increase in vacancy and $0.76 psf drop in rent from Q4 2024. There was 1.2 million square feet of positive absorption last year, as 4.5 million square feet of new industrial inventory came onto the market. Another 2.8 million square feet is under construction.
