AN INTERVIEW WITH
Sanjiv Chadha, MCR, SIOR
Principal, Managing Director, Toronto West, Southwestern Ontario & Occupier Services
Principal, Managing Director, Toronto West, Southwestern Ontario & Occupier Services
With 2025 being a challenging year for the automotive sector and the broader economy amidst tariffs and trade tensions, what impact are we seeing on deal velocity in commercial real estate?
We’re seeing a clear slowdown in how quickly transactions are getting completed. This isn't due to a lack of demand but rather heightened caution and an aversion to risk.
Tenants and companies, especially in sectors like automotive manufacturing, are conducting deeper internal reviews before committing to space. They're closely monitoring how global shifts like tariffs impact local operations, which naturally slows things down and often leads to a wait-and-see approach. As for landlords, they are adjusting expectations around deal cycles, becoming more flexible in structure and timing.
At Avison Young, we're working with both sides to keep projects moving, to provide clarity on market conditions, and to build optionality into negotiations.
Tenants and companies, especially in sectors like automotive manufacturing, are conducting deeper internal reviews before committing to space. They're closely monitoring how global shifts like tariffs impact local operations, which naturally slows things down and often leads to a wait-and-see approach. As for landlords, they are adjusting expectations around deal cycles, becoming more flexible in structure and timing.
At Avison Young, we're working with both sides to keep projects moving, to provide clarity on market conditions, and to build optionality into negotiations.
Are occupiers still expanding in this market or has the uncertainty stalled growth?
The uncertainty hasn't stalled growth; it's reshaped it. Occupiers are becoming more cautious, selective, and strategic in their real estate decisions. Growth is driven by specific operational needs, such as access to talent, better-performing facilities, or improved geographic regions.
"It's no longer about taking on more space but finding smarter space."
For landlords, this shift means offering the right solution in the right location. Buildings that support flexibility and efficiency, and employee retention will still be in demand. Our role is to align both sides, ensuring occupiers solve the right problems and landlords deliver value in a changing market.
With the current economic headwinds, what does real estate agility look like for the rest of the year?
Real estate agility in 2025 is about having options – and not just when it comes to space. For many companies, it's about having a portfolio that can adapt, bend, and flex to business changes without creating too much friction. This involves negotiating flexible leases and lease terms, such as built-in flexibility, shorter durations, expansion options, and sublease rights. Equally important is having the right data and internal alignment to act quickly when opportunities arise.
For landlords, agility means being responsive, because being rigid on deal structure or too slow to respond to tenant needs could mean missing out. The market is rewarding owners who understand adaptability, not just availability. And that's the new value proposition. So, whether you're a tenant trying to stay nimble or a landlord navigating new lease dynamics, Avison Young is helping ensure that real estate remains an asset and not a constraint.
For landlords, agility means being responsive, because being rigid on deal structure or too slow to respond to tenant needs could mean missing out. The market is rewarding owners who understand adaptability, not just availability. And that's the new value proposition. So, whether you're a tenant trying to stay nimble or a landlord navigating new lease dynamics, Avison Young is helping ensure that real estate remains an asset and not a constraint.
How would you describe the industrial market outlook in Southwestern Ontario as well as the GTA? And what should we be paying attention to right now?
Overall, the industrial market is transitioning, not softening. Vacancy has edged up but is coming off historic lows. Rent growth is starting to level out and with the construction pipeline thinning, the market finally has room to catch up and rebalance.
We're closely watching the quality of demand as there’s still activity from users and tenants across the GTA and Southwest Ontario.
We're closely watching the quality of demand as there’s still activity from users and tenants across the GTA and Southwest Ontario.
Absorption & Deal velocity
Industrial absorption
Deal velocity (sales volume)
New supply under construction
Greater Toronto
Southwestern Ontario
Decisions are driven by location and access to labour, but decisions are also increasingly being driven by infrastructure and power availability, which are becoming real factors.
The quality of space still commands a premium for occupier tenants. This softening in demand creates a unique opportunity that barely existed 12 to 18 months ago, when top quality space was once almost impossible to find. We now have more options, especially brand-new, high ceiling height warehouses and modern logistics facilities, which means occupiers can now be choosier and even negotiate on terms that were strictly landlord-driven before.
For landlords and developers, the message is that competition is rising, making it crucial to differentiate your asset with the features and flexibility that occupiers want. We’re helping both sides stay ahead by identifying value for occupiers and positioning space to attract and retain the right users.
The quality of space still commands a premium for occupier tenants. This softening in demand creates a unique opportunity that barely existed 12 to 18 months ago, when top quality space was once almost impossible to find. We now have more options, especially brand-new, high ceiling height warehouses and modern logistics facilities, which means occupiers can now be choosier and even negotiate on terms that were strictly landlord-driven before.
For landlords and developers, the message is that competition is rising, making it crucial to differentiate your asset with the features and flexibility that occupiers want. We’re helping both sides stay ahead by identifying value for occupiers and positioning space to attract and retain the right users.
Our take on office construction costs, tariffs, and trade negotiations
We sat down with Arlene Dedier, Principal, Managing Director, and Canadian Leader of our Project Management Services, to get her insights on what’s shaping the future of office development across the country.
Reach out to Sanjiv Chadha to learn more
