Greater Toronto commercial real estate investment gained momentum in Q2 2026, pushing first-half volume to nearly $10.2 billion, up 41 per cent year over year.* Despite the increase in activity, commercial investors and end users continued to play it safe, favouring prime assets while older, less competitive product struggled to attract buyers and tenants, according to Toronto-based Michael Davidson of REMAX Realtron, who provided insight for the Fall 2026 Canadian Commercial Real Estate Report. Multi-family investment surged over 240 per cent year over year as institutional capital targeted established concrete rental buildings with operational upside, while industrial availability tightened to 4.3 per cent in Q2. Meanwhile, prime office space in the Financial District experienced strong demand in triple-A buildings with gross rents ranging from $90 to $105 psf, contrasting sharply with secondary Class C office inventory where rising availability has led some landlords to incorporate demolition clauses into new leases.

This local flight to quality directly mirrors the central themes of the national report, which highlights a selective, income-focused recovery taking shape across Canada’s commercial real estate landscape. As investors nationwide navigate elevated construction costs and cautious underwriting by prioritizing defensible, cash-flowing assets over speculative projects, the GTA stands out as a primary destination for institutional and private capital. Toronto’s market dynamics—where prime retail, tight industrial logistics space, and multi-family assets command premium valuations while secondary office and development land face headwinds—exemplify how national economic forces are creating a clear divide between top-tier commercial assets and secondary properties across the country.

Greater Toronto Commercial Real Estate Market Overview

Class-A Logistics Demand Keeps GTA Industrial Availability Low at 4.3 Per Cent

According to Davidson, the Greater Toronto Area’s industrial availability rate hovered at 4.3 per cent* in the second quarter of the year, down marginally from Q1 2026 levels. Lease rates range from $16 to $17 net psf, with demand concentrated in Class-A logistics and supply-chain space, particularly in York and Peel Regions. Smaller buildings between 2,500 and 5,000 sq. ft. with high ceilings and multiple loading bays remain especially sought after. The industrial average price per square foot, based on all GTA building sales in the first half of the year sat at $445 psf*, falling just short of the $453 psf* reported during the same period in 2025. In Toronto, the average industrial price per square foot saw a more significant downswing from the $466 psf* reported in the first six months of 2025, falling to $418 psf* in the first half of 2026.

Grocery-Anchored Retail Assets Command Premium Rates Across Mid-Toronto

Retail remains a coveted asset class, but limited inventory, particularly in grocery-anchored centres, continues to constrain sales as owners hold onto prized assets. Net rental rates for urban retail in well-trafficked locations typically start at approximately $35 psf, climbing as high as $80 psf in prime locations. According to MLS data, the average asking net rental rate for 178 comparable properties within a 25-km radius of mid-Toronto currently sits at $30 psf. With net rents and TMI costs on the rise, retailers are increasingly focused on making more efficient use of their existing space. Some foreign investment is also occurring, with buyers targeting freestanding retail properties along major thoroughfares.

Institutional Capital Surge Drives GTA Multi-Family Investment Up 240 Per Cent

Multi-family has emerged as another major draw for capital, with investment volume up more than 240 per cent in the first half of 2026. REITs, institutional investors and private money are targeting established rental properties, particularly older concrete buildings with below-market rents, transit access and an operational upside. Price per door in the GTA sat at just over $354,100 in the first half of 2026, up from $350,318 during the same period in 2025.* Some owners are investing in seniors’ rental residences by retrofitting existing buildings and increasing accessibility, while others are converting their multi-family housing, retail and office buildings to hotels.

Flight to Quality Drives Leasing Momentum in Financial District Office Sector

Overall office availability fell more than 200 basis points year over year to 15.5 per cent in Q2 2026, as businesses continued to gravitate toward higher-quality space with modern amenities. Leasing activity in triple-A buildings remains strong, with gross rents ranging from $90 to $105 psf, including TMI, while vacancies in the city’s financial district have fallen substantially. Demand has also spilled into well-positioned Class-A and select Class-B buildings in the core.

C-Class space tells a different story. Availability has risen over the past six months, with gross rents in C-Class and some B-Class buildings outside the core hovering between $39 and $45 psf, including TMI. While few owners are prepared to undertake costly upgrades, some owners of well-located properties are investigating the potential conversion of older office buildings into boutique hotels or short-term accommodations, where permitted. Investors and end users are also targeting low-vacancy C-Class buildings near transit and major arteries. As property values decline, demolition clauses are increasingly being incorporated into new leases, while long-time owners continue to hold their assets in anticipation of improved market conditions.

Joint Ventures and Multiresidential Repositioning Support GTA Development Land

Land development remains the weak link. Higher borrowing and construction costs, fluctuating bond yields and lengthy non-income-producing development cycles have deterred some investors. However, some multi-residential projects are moving forward, particularly those where capital improvements offer opportunities to enhance the value of existing assets. Opportunities for joint ventures are also emerging, with landowners and developers exploring seniors’ rental housing and retirement residences in areas where municipalities are pursuing higher-density development. In some instances, projects are moving forward with an eye to future repositioning.

GTA Commercial Market Outlook: Selective Capital Focuses on Prime Income Assets

While the spike in Q2 activity helped lift GTA investment volume in the first half of 2026, capital remains highly selective, with quality, location and income stability driving demand. Prime, lower-risk assets continue to attract buyers, while older and more capital-intensive properties remain on the sidelines.

*Source: Altus Group, Altus Data Studio