Market Report

Q1 2025
Commercial Real Estate for
Peel, Halton & Hamilton Regions

Read Report

Overview

The commercial real estate market in the GTA is showing signs of stability and caution. The needs of tenants, as well as specific industry trends have altered activity during the last quarter. With large economic uncertainty and an imminent election in Canada, many are taking a safe approach with their real estate decisions. Flexible occupiers are holding off on real estate activity while the economic environment continues to develop.

While there are challenges in the market, industrial absorption remained largely positive in the region, indicating there is still strong demand for industrial space despite the caution being shown. Lease rates increased gradually, while landlords are leveraging the use of tenant allowance to drive lease agreements and close deals. Availability in the suburban GTA markets dropped, indicating that demand is still strong, and lease prices may continue to trend upwards.

The volume of industrial sale and lease transactions remained steady, but a large drop in sale prices suggests that buyers remain active but are more selective in their acquisitions. As lease rates continue to rise, some tenants are exploring opportunities to transition into ownership, seeking long-term cost certainty through an owner-occupier strategy.

With the economic uncertainty still in play, many developers are pausing new land acquisitions, preferring to wait for improved conditions before re-engaging. Both land values and sales activity have softened, reflecting the ongoing caution in the development market.

Office leasing saw a slight decline, with smaller suites continuing to dominate transaction volume despite ongoing market headwinds. While availability rates remained stable, sales prices fell, representing the continued adjustment of asset values in response to evolving market conditions.

Looking ahead, the Hamilton-Halton-Peel region appears to be entering a period of measured adjustment. Overall, during Q1, lease rates saw slight increases, sales prices dropped, and transaction volume decreased slightly. The trajectory of the market will depend largely on broader economic indicators and potential policy shifts expected over the coming months. While fundamentals remain intact, strategic decision-making and adaptability will be key for those looking to capitalize on emerging opportunities through the remainder of 2025.