Commercial real estate across the Greater Toronto Area is entering a much more balanced phase.
After several years of sharp rent increases, rising vacancy and economic uncertainty, the market is beginning to stabilize. Industrial leasing activity is improving, office demand is recovering, retail space remains tight in many strong suburban markets, and investment activity is picking up.
For business owners, this creates an interesting environment. There may still be opportunities to negotiate favourable lease terms, but the best properties are beginning to tighten again.
Here are the trends I am watching.
The GTA Commercial Market at a Glance
Industrial
- GTA availability: approximately 4.2% to 5.0%, depending on the brokerage methodology
- Net rents: approximately $16 per sq. ft.
- Q3 absorption: approximately 1.9 to 2.0 million sq. ft.
- Demand has now produced five consecutive quarters of positive absorption according to CBRE.
Suburban Office
- Vacancy: 19.6%
- Average net asking rent: $18.25 per sq. ft.
- Q3 absorption: approximately 237,000 sq. ft.
- Vacancy declined by another 50 basis points during the quarter.
Downtown Office
- Vacancy continued to decline in Q3.
- Downtown Toronto recorded more than 230,000 sq. ft. of positive absorption.
- Approximately 74% of leasing activity involved quality built-out space, showing how strongly tenants continue to favour move-in-ready offices.
Retail
- Suburban retail fundamentals remain strong.
- Grocery-anchored centres and service-oriented retail continue to experience tight availability.
- Medical, fitness, personal services, restaurants and quick-service food operators remain among the most active tenant categories.
Industrial: The Market Is Stabilizing
Industrial real estate remains one of the most important commercial sectors in the GTA, particularly for manufacturing, distribution, construction, trades and logistics businesses.
The major change in 2026 has been absorption.
CBRE reported approximately 2.0 million sq. ft. of GTA industrial net absorption in Q3, bringing year-to-date absorption to approximately 5.4 million sq. ft. Colliers reported a similar quarterly figure of approximately 1.9 million sq. ft. and an availability rate that tightened to 4.2%.
At the same time, rents have continued to soften slightly.
Colliers reports that GTA industrial net rents have remained around the $16 per sq. ft. range since Q2 2025, even though rental rates declined another $0.19 per sq. ft. during Q3.
What This Means for Business Owners
This may be one of the better windows we have seen in several years for tenants to make a move.
Availability is still considerably higher than it was during the industrial boom, rents have stabilized, and landlords may be more willing to discuss:
- Free rent
- Fixturing periods
- Tenant improvement contributions
- Flexible possession dates
- Expansion options
- Renewal options
- Reduced deposits or guarantees
However, positive absorption is now reducing available inventory. Businesses with leases expiring within the next 12 to 24 months should start planning early rather than assuming today’s tenant-friendly conditions will still exist when their lease expires.
Office: Recovery Is Becoming Harder to Ignore
The office market may be the biggest change occurring in GTA commercial real estate.
For several years, businesses had significant leverage because vacancy was high. That advantage is beginning to shift.
Toronto’s suburban office vacancy declined to 19.6% in Q3 2026, while average net asking rents were approximately $18.25 per sq. ft.
Downtown Toronto is tightening even faster at the higher end of the market.
Colliers reports seven consecutive quarters of positive absorption, while CBRE found that demand is increasingly concentrated in quality, built-out space.
For business owners, there is still substantial office inventory available, particularly in suburban and secondary buildings. But if you want a high-quality, turnkey office in a strong location, the negotiating window may be narrowing.
Retail: Strong Locations Are Still Difficult to Find
Retail is increasingly a story of location and use.
CBRE reports that suburban retail fundamentals remain particularly strong, with grocery-anchored centres experiencing tight vacancy. Toronto has also seen some of the strongest rental increases among the Canadian markets.
Demand is particularly strong from:
- Medical and healthcare users
- Fitness and recreation
- Personal services
- Restaurants and quick-service restaurants
- Childcare
- Experience-based businesses
For growing businesses, the challenge may not be negotiating rent. It may simply be finding the right space in the right trade area.
What Does Commercial Space Cost?
The numbers below should be viewed as broad market reference points. Commercial real estate pricing varies significantly based on municipality, building quality, zoning, unit size, clear height, parking, shipping, frontage and lease structure.
| Asset Class | Indicative Lease Cost | Indicative Purchase Price |
|---|---|---|
| Industrial | Approximately $16/sq. ft. net | Approximately $229 to $353/sq. ft. |
| Suburban Office | Approximately $18.25/sq. ft. net | Approximately $290/sq. ft. |
| Commercial / Retail | Highly location dependent, with recent TRREB transactions averaging approximately $30/sq. ft. net | Approximately $510/sq. ft. |
The current industrial leasing figure is supported by Q3 2026 Colliers data. The office leasing figure comes from CBRE’s Q3 suburban Toronto report. The purchase-price figures are broader transactional reference points rather than current asking-price benchmarks. TRREB’s Q4 2025 transactions with disclosed pricing averaged approximately $228.51/sq. ft. for industrial, $510.39/sq. ft. for commercial/retail and $290.31/sq. ft. for office. More recent industrial brokerage data suggests GTA sale pricing closer to the mid-$300s per sq. ft., illustrating how dramatically pricing can vary based on the properties that transact.
For a business owner, the more important number is usually total occupancy cost rather than rent alone.
A $16 net industrial lease could become materially more expensive once TMI, utilities, insurance, maintenance, construction, financing and moving costs are included.
Where Are the Opportunities?
1. Industrial Space for Owner-Users
Industrial rents have stabilized while financing conditions and sale pricing are significantly different from the peak market.
Businesses that expect to occupy the same location for seven to ten years or longer should consider running a lease-versus-buy analysis.
The opportunity is not necessarily that industrial real estate is “cheap.” It is that buyers can now make decisions in a more normalized market rather than competing in the environment we saw several years ago.
2. Suburban Office Space
With suburban vacancy still at 19.6%, businesses have considerably more choice than they do in industrial or retail.
This can create opportunities to secure better-quality space, negotiate improvements, or move into a more professional building without dramatically increasing occupancy costs.
3. Secondary Office Buildings
The gap between premium and secondary office buildings continues to widen.
That creates risk for older office owners, but it may also create opportunity for investors who can acquire well-located properties at a reset basis and reposition them.
This is a highly property-specific strategy. Building quality, parking, transit, floor plates and redevelopment potential matter considerably more than simply buying because the price is low.
4. Service-Oriented Retail in Growing Suburbs
Population growth continues to support suburban retail.
Medical offices, pharmacies, fitness, childcare, restaurants and personal services can benefit from growing residential communities where commercial supply has not kept pace. CBRE specifically identifies suburban retail and service-oriented businesses as areas of continued strength.
For Durham Region, this makes growing communities in Pickering, Ajax, Whitby, Oshawa and Clarington particularly important to watch.
Durham Region is projected to reach approximately 1.3 million residents and 460,000 jobs by 2051. Seaton in Pickering alone is expected to accommodate more than 60,000 residents and 31,000 jobs, while transit expansion through Oshawa, Courtice and Bowmanville should support additional employment and commercial development.
5. Multifamily
Multifamily investment activity also accelerated substantially in Q3.
Colliers reported approximately $938.6 million of GTA multifamily transactions during Q3 2026, up almost 195% year over year. Approximately 3,169 suites traded, with an average year-to-date value of roughly $302,000 per suite and average cap rates around 4.61%.
For investors, the sector remains expensive, but improving transaction activity suggests confidence is returning.
Investment Capital Is Returning
There are broader signs that investors are moving back into Canadian commercial real estate.
CBRE reported $16.2 billion of Canadian commercial real estate investment in Q2 2026, the highest quarterly total since early 2022. Toronto represented approximately 44% of national investment volume.
Long-term bond yields increased sharply during Q3, which has increased financing costs and reduced the spread between real estate yields and government bonds. CBRE’s national all-property cap rate was approximately 6.56% in Q3.
In other words, activity is returning, but underwriting matters.
The Bottom Line
The GTA commercial real estate market is becoming healthier, but opportunities vary significantly by asset class.
For tenants: Industrial and suburban office users still have negotiating leverage, but improving absorption means the strongest opportunities may not last indefinitely.
For business owners considering a purchase: This is a good time to revisit the lease-versus-buy calculation, particularly if your business has stable space requirements.
For investors: Look for assets where demand is supported by long-term fundamentals rather than simply buying because pricing has declined.
For Durham Region: Population growth, transportation investment, healthcare expansion and Highway 407 employment lands continue to create long-term opportunities for businesses and investors.
The most important takeaway is simple: commercial real estate should support your business strategy, not restrict it.
If your lease expires within the next 12 to 24 months, you are considering purchasing your building, or you are looking for commercial investment opportunities in the GTA or Durham Region, now is the time to start reviewing your options.
Saman Habibi REALTOR®, CPA, CA
DR Real Estate Group
905-449-4242 | Saman@thedrgroup.ca | THEDRGROUP.CA
