MPAC data reveals five-year surge reshaping Ontario's commercial property landscape
Ontario's commercial real estate market has undergone a significant structural shift over the past five years, according to new data from the Municipal Property Assessment Corporation.
Multi-residential development has reached levels not seen since the 1970s, while industrial space has expanded at a pace that reflects the fundamental reordering of consumer behaviour across the country.
MPAC's inaugural Business Properties Report examines activity across six commercial sectors from 2021 to 2025. The findings underscore the structural supply constraints that have kept rent growth elevated across the province, even as the composition of that growth has grown more uneven by unit type and geography.
"Ontario's business property landscape continues to evolve responding to changing economic conditions, shifting business needs, consumer behaviours and regional growth," said Greg Martino, Chief Assessor and Data Officer at MPAC.
"Those changes are evident in how communities are evolving through the different property types being developed, bought and sold as Ontario's business industry looks to meet the needs of communities across the province."
New supply has skewed heavily toward smaller unit types.
"New supply is increasingly being driven by one- and two-bedroom units, while additions of larger units have declined from what we saw historically," Martino said.
"The shift reflects a balance between housing demands and rising construction costs."
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Sales activity in 2025 was dominated by walk-up apartments, which accounted for 80% of transactions.
The median price per unit recorded a modest year-over-year decline of 2.5%, with Toronto exhibiting a similar trend.
For brokers advising investors in the multi-residential space, the divergence in rental performance by unit type and geography has rarely been more consequential. Four-bedroom rents in Western Ontario and Ottawa have climbed 60% since 2021, reflecting chronic undersupply in larger family-sized units.
Meanwhile, an oversupply of micro-condo and smaller units in Toronto has applied modest downward pressure on one-bedroom rents, which fell from $1,990 in 2024 to $1,945 in 2025.
Industrial and office markets signal shifting demand
The standard industrial sector has added nearly as much leasable space between 2020 and 2025 as it did across the entire preceding decade, from 2010 to 2019.
Warehousing accounts for more than 40% of that new supply, a direct function of e-commerce growth and the intensifying demand for last-mile distribution capacity along well-developed transportation corridors.
Non-warehouse industrial properties saw improved sales activity in 2025, with higher prices and increased transaction volumes.
Warehouse properties, by contrast, experienced a period of stabilisation, with prices per square foot moderating and sales activity easing.
In the office sector, the picture is more cautious. Ontario's office inventory is largely composed of older buildings, with nearly half, or 49%, constructed between the 1970s and 1990s.
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Province-wide vacancy rose steadily to 16.1% while median rents held relatively stable at approximately $17 per square foot.
Toronto continued to post the highest rental rates in the province at a median of $24.05 per square foot, though the city also recorded a notable increase in vacancy.
Within new construction, medical and dental office buildings have accounted for more than 20% of new builds since 2010, well above the historical average of 12%, suggesting durable demand for in-person healthcare services.
Small commercial and hospitality round out a complex picture
Ontario's small commercial inventory remains heavily anchored in older mixed-use stock, with more than half of existing properties developed prior to 1950.
Recent growth has been modest, led largely by single-storey retail development. Toronto, Ottawa, Oakville, Hamilton, and Whitby collectively accounted for 20% of the total building area added over the past five years.
Transaction volumes remain below the 2021 peak, though activity picked up in single-storey retail and single-occupant office segments through 2025.
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