MONTREAL — Canadian warehouse leasing numbers surged last year as shippers sought flexibility -- and a way to work around burdensome U.S. tariffs, a new report says.
Leasing activity in the Toronto area soared to the third-highest level on record in 2025, climbing 43 per cent to 26.9 million square feet, according to figures from Cushman & Wakefield. National volumes also jumped, far outpacing those from the previous three years.
“It just was on fire over the last half of 2025,” said Kristina Bowman, national research manager at the real estate firm.
“It’s like the market just flipped a switch.”
Across the country, activity ramped up as packaging and logistics firms strove to meet a boost in demand. That increase came from shippers and retailers looking to hedge their bets in response to U.S. President Donald Trump’s shifting tariff proclamations.
“Warehouse demand isn’t being driven by growth -- it’s being driven by uncertainty,” said Alan Dewar, executive vice-president at Winnipeg-based customs brokerage GHY International, from an industry conference in Texas.
“Warehouses aren’t just storage anymore; they’re a front-line tool for managing trade risk.”
Facilities along key trade corridors such as Ontario’s Highway 401 offer speed to market, all the more important when racing to beat tariff deadlines. They also make for essential storage spots to ride out bottlenecks or feed spikes in demand.
So-called third-party logistics companies, or 3PLs, led the leasing boom as shippers and retailers looked to outsource risk.
“They would rather avoid a long-term lease obligation at these very high rates and prioritize the flexibility of 3PLs more so than the flexibility of having their space themselves,” said Juana Ross, a research manager at Cushman & Wakefield, noting the rising price of industrial spaces.
In an era of shifting trade rules, the facilities serve another purpose. They can help shippers get around U.S. import tariffs by rerouting goods through Canada that once would have flowed directly into the U.S. from overseas.
If the goods are substantially altered in those Canadian industrial spaces, they can effectively qualify for an exemption under the United States-Mexico-Canada Agreement, avoiding levies on imports from countries ranging from China to Germany.
“They import their chocolate from Europe to Canada. Then they develop it further into another food product. Then they’re able to make it USMCA-compliant. And then they ship it into the States tariff-free,” said Lisa McEwan, co-owner of customs brokerage Hemisphere Freight, referring to a client.
“Before, they might have just shipped it and manufactured it in the U.S.A.”
The warehouse rush might seem counterintuitive, given that trade between the two countries declined last year.
U.S. goods imported from Canada dropped seven per cent to US$383 billion in 2025, while American exports to Canada fell 3.8 per cent to US$336.5 billion, according to the Office of the U.S. Trade Representative.
McEwan called the supply and distribution rejig carried out by shippers and enabled by warehouse leases a trade “contortion.”
“It’s companies pivoting and trying to navigate, circumventing tariffs,” she said.
Demand is also up on the other side of the border, especially for large warehouses.
U.S. manufacturers, data centre suppliers and third-party logistics providers drove a 31 per cent jump in the number of leases signed -- 146 -- for warehouses over 500,000 square feet, according to Cushman & Wakefield.
Another reason for the warehouse frenzy comes down to an executive order by U.S. President Donald Trump last August that removed the de minimis tariff exemption, which had allowed packages worth US$800 or less to ship to the U.S. without duties.
To reduce red tape -- each order must be registered with U.S. customs authorities, for example -- shippers, including many based in Canada, are relying less on direct-to-consumer orders and more on bulk shipments, which require storage.
“A bunch of my clothing company clients, they’ve had to get warehouses into the States,” McEwan said. “That way they can just ship inventory to that warehouse and then the warehouse will distribute it to individuals within the U.S.”
“Otherwise they would have to do an individual entry for every small shipment,” she said.
Back in Toronto, the report found manufacturers accounted for the second-largest share of new leases, after third-party logistics companies. But the activity from manufacturers dipped below 2024 levels and ranged across sectors.
Most were on the lighter industrial side, with the 26 leases for buildings over 200,000 square feet in the Toronto area last year signed by producers of wide range of goods such as windows and doors, ductwork and semiconductors.
Retail distributors comprised the third-biggest slice of lease signers.
Across the country, the number of new leases in major markets shot up by 73 per cent to 78 warehouses above 125,000 square feet. For spaces under 75,000 square feet, the figure rose nine per cent to 2,311 leases.
Even as the need for big warehouses soared, “the real demand really continues to be in that sub-25,000-square-foot space,” Bowman said.
This report by The Canadian Press was first published April 15, 2026.
Christopher Reynolds, The Canadian Press
