�ȵ����

OTTAWA – Commercial real estate firm JLL has released its first annual Canadian Industrial Demand Survey that aims to provide insights for the country’s six largest markets – Toronto, Montréal, Vancouver, Edmonton, Calgary and southwestern Ontario.

The report reveals the ongoing tariff discussions have created “significant uncertainty” for the industrial real estate sector, but the impact isn’t as bad as initially thought…so far.

“Leasing activity was on the rise heading into 2025, then began to slow in the springtime after successive tariff announcements in February through April,” it reads. “Yet in Q3 we observed an unexpected rebound as negotiations that had been on hold broke through. While uncertainty will continue to weigh on the market until there is a resolution to the CUSMA negotiations, decisions must still be made.”

Overall, the outlook remains positive because much of the demand is geared towards delivering products within the country.

There will also be new, untapped opportunities with increased trade to both Europe and Asia. This is particularly true in and around ports such as Vancouver and Montréal.

“Existing rail links and pre-existing trade agreements should enhance co-operation between Canada and Mexico,” the report adds. “As some industries inch toward a more protectionist model, there will be opportunities for domestic substitution as Canadian companies fill new roles that were previously fulfilled abroad. And despite rising tariffs in certain industries, the U.S. will always be an important partner to Canada.”

Here are some other key highlights from survey:

Construction, machinery and materials are most active

The most prominent industry as it relates to current user requirements is construction, machinery and materials. The survey revealed 34.5 per cent of this demand is looking for manufacturing space, the highest of any user industry.

“While this segment has been greatly impacted by the trade war, its strong representation in our survey underscores its strategic importance, especially given the structural housing shortage facing Canada,” it reads. “There is also a strong presence of third party logistics (3PL) providers. At a time when supply chains are reorienting, these companies bring important expertise to their clients and many appear to be in growth mode.”

Calgary seeing outsized demand relative to availability

Calgary is the fifth largest Canadian industrial market by inventory, yet it ranks second in projected demand. It is the only Canadian market to witness declining industrial vacancy in 2025 and currently boasts the country’s lowest industrial vacancy rate. However, Calgary’s emergence as a “large-bay distribution hub for Western Canada and its relative insulation (thus far) from U.S. tariffs should provide tailwinds for demand over the medium-term horizon.”

Calgary and Toronto dominate large bay requirements

Toronto and Calgary make up over 82 per cent of requirements over 500,000 square feet. Proximity to population drives the GTA’s dominance for large distribution requirements, the report notes. Meanwhile, Calgary has emerged as a key inland port and distribution node for Western Canada. It is also benefitting from spillover demand out of the “much pricier Vancouver market.”

Eastern Canadian markets have been disproportionately impacted by trade war

Leasing activity was on an upward trajectory in Q4 2024 and Q1 2025 but reversed dramatically in Q2 2025 for Eastern Canada as many ongoing deals were paused. In Q3, the industrial market rebounded with stronger leasing activity despite the noise. However, the demand picture remains notably weaker in southwestern Ontario and Montréal as these markets have proportionally high exposure to tariff-impacted industries including aluminum, steel and automotive. The upcoming renegotiation of the Canada-US-Mexico Free Trade Agreement (CUSMA) will continue to weigh on the market heading into next year.

For more on the report