Industrial remains the backbone of the London commercial real estate market, supported by a strong high-tech, manufacturing and food-processing base, although demand has increasingly shifted toward smaller properties, according to London-based Mel Vetero of REMAX Centre City, who contributed insights to the REMAX Canada Fall 2026 Commercial Real Estate Report. According to Vetero, absorption has slowed for buildings over 50,000 sq. ft., placing some downward pressure on overall lease rates.
This local shift toward compact footprints and existing income-producing assets directly reflects the broader themes identified in the national report. Across Canada, elevated construction expenses and tighter lending criteria are driving investors and end-users away from speculative developments and toward smaller, highly functional, or retrofitted existing properties. London’s market dynamics—where smaller industrial units and established neighbourhood retail spaces outperform larger building formats and secondary downtown office inventory—provide a clear illustration of how Canadian commercial real estate growth is becoming increasingly specialized and asset-specific.
London Commercial Market Overview
Small Footprints Drive London Industrial Real Estate Demand
According to Vetero, the sweet spot for industrial space in between 1,000 and 2,000 sq. ft., offering high ceilings, office/warehouse space and drive-in or truck-level doors. Limited availability is forcing tenants to move quickly, with lease rates ranging from $10 to $12 psf for older product and $14 to $18 psf for recently completed Dancor developments. Conditions are similar across London’s southeast, north and southwest industrial corridors. End users are typically purchasing smaller properties, while REITs and private investors continue to target larger, multi-unit assets. Six industrial sales occurred in the first half of the year, ranging from smaller owner/user properties to larger investment assets, including the $7.1-million sale of two fully leased buildings.
Health, Wellness, and Service Operators Lead London Retail Market Expansion
Retail activity also remains brisk, particularly in established plazas and strip malls where vacancy is limited. Lease rates start around $20 psf and can reach $40 psf in stronger locations. Availability has increased in traditional malls, reflecting higher lease rates and reduced foot traffic. While larger units remain more difficult to move, demand is greatest for smaller spaces in the 1,000- to 1,200-sq.-ft. range, with health, beauty, wellness and food-service operators increasingly replacing traditional retailers. Grocery-anchored plazas continue to attract REITs and private investors for their income stream and value-add potential.
Purpose-Built Apartment Supply Increases London Rental Vacancy to Four Per Cent
London’s multi-family rental market has seen a considerable increase in supply following a wave of purpose-built rental construction, pushing vacancy to four per cent. Close to 2,600 apartment units were added between January and September 2025, according to CMHC, with additional projects still in the pipeline, contributing to a 4.5-per-cent decline in the average rent for a two-bedroom unit this year, according to Statistics Canada.
Suburban Office Outperforms Core in London Commercial Market
Office remains the weakest segment, with availability at 16 per cent in Q2 2026, although that is down from a peak of 21.4 per cent in Q3 2024. Absorption remains slow despite downtown lease rates around $10 psf. Office conversions are considered one possible solution although only two buildings have moved in that direction. The shift toward suburban office continues, supported by better amenities and parking. Suburban rates generally range from $12 to $15 psf, reaching as high as $18 psf for newer product.
Diversified Economic Base Underpins London Commercial Real Estate Outlook
Despite some softness in the local economy, including an unemployment rate of 8.5 per cent in August, London’s diversified economic base continues to provide a solid underpinning for commercial real estate. Manufacturing, food processing, technology and population growth continue to support demand, although activity remains increasingly selective by asset class and property type.
Frequently Asked Questions
Industrial remains the backbone of London’s commercial market, supported by strong manufacturing, food-processing, and high-tech sectors. Demand is particularly strong for smaller footprints between 1,000 and 2,000 sq. ft. featuring high ceilings and drive-in or truck-level loading doors.
Retail activity remains brisk in established plazas and strip malls, where lease rates range from $20 to $40 per sq. ft. Availability has increased in traditional malls, while demand is highest for 1,000- to 1,200-sq.-ft. spaces occupied by health, beauty, wellness, and food-service operators.
Industrial lease rates range from $10 to $12 per sq. ft. for older properties and $14 to $18 per sq. ft. for recently completed new developments. Limited availability in smaller multi-unit formats is forcing tenants to move quickly across London’s industrial corridors.
London’s purpose-built rental supply expanded significantly with nearly 2,600 apartment units added between January and September 2025. This wave of new inventory pushed vacancy to 4 per cent and contributed to a 4.5 per cent year-over-year decline in average two-bedroom rents.
Office remains the weakest segment, though overall availability eased to 16 per cent in Q2 2026 (down from a peak of 21.4 per cent). Downtown lease rates average around $10 per sq. ft. with slow absorption, while suburban office space commands $12 to $18 per sq. ft. supported by better amenities and parking.
London’s diversified economic foundation across manufacturing, food processing, technology, and steady population growth continues to underpin commercial demand. However, investment and leasing activity remain increasingly selective by asset class and property size.
About the Report
The REMAX Canada Fall 2026 Commercial Real Estate Report includes data and insights supplied by REMAX brokerages and analyzed by Point Blank Communications. REMAX brokers and agents are surveyed on market activity and local developments. Each REMAX office is independently owned and operated. Responses are meant to capture industry-level information and are not meant to serve as an indication of Real REMAX Group's company-specific growth trends.
About the REMAX Network
As one of the leading global real estate franchisors, REMAX, LLC is a subsidiary of Real REMAX Group (NASDAQ: REAX) with more than 145,000 agents in nearly 8,500 offices and a presence in more than 120 countries and territories. REMAX Canada refers to REMAX Canada, Inc., which is a subsidiary of REMAX, LLC. Nobody in the world sells more real estate than REMAX, as measured by residential transaction sides. REMAX was founded in 1973 by Dave and Gail Liniger, with an innovative, entrepreneurial culture affording its agents and franchisees the flexibility to operate their businesses with great independence. REMAX agents have lived, worked and served in their local communities for decades, raising millions of dollars every year for Children's Miracle Network® and other charities. To learn more about REMAX, to search home listings or find an agent in your community, please visit remax.ca. For the latest news from REMAX Canada, please visit blog.remax.ca.
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