Buying a industrial.

FAQ

Industrial FAQ — what buyers ask

Direct answers about industrial buying in the GTA. Specific numbers, Ontario regulations, 2026 market data.

• What's the cap rate for industrial in the GTA in 2026?

  Stabilized industrial cap rates remain among the tightest in Canadian commercial real estate at 4.5%-5.5%. Small-bay industrial (5,000-15,000 sqft) trades 5.0%-5.5%. Modern logistics / distribution (50,000+ sqft, 32'+ clear height) trades 4.5%-5.0%. Older 1960s-70s industrial in Etobicoke or Scarborough trades 5.5%-6.5% with capex upside if you can re-zone or modernize.

• Why is GTA industrial so expensive?

  GTA vacancy is among the lowest in North America — sub-3% in 2025-2026. Drivers: e-commerce demand for last-mile distribution, lack of new development land (most GTA industrial parks are built out), and the conversion of older industrial to residential which removes inventory. Effective net rents have risen 6-8% annually for 5 consecutive years.

• What should I check when buying small-bay industrial?

  Three things matter most: (1) clear ceiling height (under 22' limits forklift use and rental value), (2) loading — truck-level vs. grade-level doors, drive-in capability, trailer parking. (3) Power capacity (200A vs. 600A vs. 1200A — limits manufacturing tenants). Also verify zoning permits the intended use (E-zoning vs. M-zoning vs. P-zoning all have different permitted uses). Environmental Phase I is mandatory for industrial.

• What's a typical net rent for industrial in the GTA?

  Modern logistics + distribution: $14-18/sqft net + $4-5 TMI = $18-23 gross. Older small-bay industrial: $11-15/sqft net + $4-5 TMI. Flex space (industrial + office mix): $14-20/sqft net. Yard / outdoor storage: $2,500-$4,500/acre/month. Note that GTA net rents have risen at 6-8% annually for 5 years and showed no sign of plateauing through 2026.

• Are there opportunities to convert old industrial in Toronto?

  Yes — Toronto has actively permitted industrial-to-employment-lands and industrial-to-residential conversions in select wards. Best candidates: Liberty Village, the Junction, parts of Etobicoke and Scarborough that were re-zoned MCR (Mixed Commercial-Residential) since 2021. Conversion economics work when acquisition is sub-$300/sqft and re-positioning yields $500+/sqft. Major capex: new structural slab penetrations, fire-rating, life-safety, parking strategy.

• How do I evaluate a commercial property's cap rate?

  Cap rate = stabilized net operating income (NOI) ÷ purchase price. Calculate NOI by taking gross rental income, subtracting vacancy allowance (5-10%), operating expenses, property tax, and management fee — but NOT mortgage payments. Compare to current market cap for the property class + submarket. A property at 6.5% cap in a 5.5% market is either a deal or has hidden issues — investigate.

• What financing is available for commercial real estate in Canada?

  Standard commercial mortgage requires 30-40% down and amortizes over 20-25 years (vs. 25-30 on residential). Interest rates run 1.0-1.5% above 5-year GIC. CMHC-insured loans available on multi-family 5+ units — down to 15% down with insurance premium added. Vendor takeback (VTB) financing is common on $5M+ deals where the seller carries a second mortgage for 5-10 years.

• What's the typical due diligence process for commercial?

  30-90 day due diligence with conditions. Standard package: Phase I Environmental Site Assessment, property condition assessment (PCA), zoning certificate, rent roll + estoppels, tenant interviews (covenant strength), historical financials (3 years), Tenant + Service contract assignments, lease assignments. For industrial: add Phase II Environmental + soil testing. For multi-family: add LTB filing search. Budget $15-50k in third-party reports.