Canadian dollar-for-dollar counter-tariffs valued at $27.6 billion, put in place on American goods in retaliation for those imposed on Canadian products by the United States, went into effect on Tuesday.

While it’s early and there are chances that this trade war could escalate further or reach a negotiated settlement in the coming days, weeks and months, its potential impact on the Canadian industrial real estate sector has become a topic of discussion.

“We have a very resilient company base and we can diversify,” Avison Young senior manager of market intelligence and national industrial lead Warren D’Souza told RENX, emphasizing that there’s no need for building owners to panic or do anything rash.

“Moving forward, we have to do something we can sustain and can grow from. That's an opportunity to look in different directions than we've normally looked at.”

D’Souza expects the current uncertainty will lead to industrial building occupiers taking a cautious approach and using the time to evaluate decisions when it comes to signing leases within the next 12 months.

In the mid- and longer terms of up to three years or more, occupiers will have to look at their suppliers and consider alternatives if tariffs are negatively impacting them. They’ll also need to strategize about how their goods are produced, stored and distributed to try and improve efficiency while keeping costs down. Many companies are already locked into leases in the five- to 10-year range, which can increase the difficulty of pivoting quickly even if they want to.

Greater Toronto Area is performing well

Ontario and Quebec rely more heavily on manufacturing than other provinces and will likely be hardest hit by U.S. tariffs — particularly the automotive, metal, building materials, electronics, furniture, clothing and toy industries — but they’ve survived since U.S. President Donald Trump declared April 2, 2025 to be “Liberation Day” and announced sweeping import tariffs. 

D’Souza said industrial leasing in the Greater Toronto Area (GTA) has actually picked up since then and the market has remained stable — though he said some of that can just be attributed to the timing of lease rollovers. 

“There's been significant leasing in the GTA, particularly in the 250,000- to 500,000-square-foot range, where vacancy had remained fairly elevated for at least two years,” D’Souza noted. 

Avison Young principal and executive vice-president Jeff Flemington, who’s quite active with GTA industrial real estate, echoed D’Souza’s view about resiliency in the local market in the same interview with RENX. 

“As much as you're hearing noise in the market that this is very detrimental, the numbers are actually proving the reverse,” he said. 

“Vacancy is continuing to go down, which shows there's still absorption of space and there's a need for these goods, and rents are no longer going down. They've stabilized and you could argue they're starting to go back up.”

Companies that are experiencing higher costs due to tariffs are passing them on to consumers and not eating them, according to Flemington.

Patriotism is paying off

Some companies in the GTA haven’t been significantly affected by tariffs because they’re manufacturing products that were derived from domestic sources and are being sold or shipped within Canada.

“We've had an uptick in inquiries for those sectors that Canada is really trying to beef up, so we've had calls for our listings for some significant square footage for aerospace and defence, which you wouldn't have seen six months ago,” said Flemington. 

“We’ve also seen inquiries, though not a ton, from companies for which it makes more sense to set up in Canada from the U.S. Some of this stuff is creating opportunities. 

“I think the Canadian focus on being less dependent on the U.S. is probably here for the foreseeable future, and there are a lot of good things that are going on to beef up our domestic industries.”

Development and transaction activity

Industrial facilities were overbuilt as part of the supply chain concerns that emerged during the COVID-19 pandemic earlier this decade, and much of it was constructed speculatively. Spec construction has since slowed and we’re seeing more design-build projects catered to the needs of specific tenants.

D’Souza said industrial property transaction activity is on par with, or could exceed, that of the last two years. Listings are attracting attention when they come up.

“A lot of developers are likely looking at their portfolios and how they can take what they have right now and reposition themselves for the future,” he explained.

“There’s also the opportunity to pick up real estate at a reduced cost compared to when we had tremendous competition not very long ago.”