The great decoupling in industrial real estate leasing

The Greater Toronto Area industrial leasing market has slowed, causing higher vacancy and a frozen development pipeline. Properties are classified by clear height: lower (16-25 ft) as class-B and higher (26-40 ft) as class-A. In 2022, lease rates were equal for both classes, but by 2025, class-A rates rose while class-B rates declined, creating a growing price gap. This reflects increased tenant choice, absorption of new class-A space, and concentrated ownership of class-A properties. If trends continue, the price gap may widen further.