COSTAR INSIGHT
Lease term trends reveal a rebalancing industrial property marketLonger commitments may reflect growing occupier confidence
Longer commitments may reflect growing occupier confidence.
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By Benjamin HaythornthwaiteCoStar Analytics
Leasing trends across the industrial property market are beginning to signal a positive shift in underlying fundamentals following a period defined by caution and short-term decision-making.
Industrial leasing activity increased meaningfully toward the end of 2025, supported in large part by the return of third-party logistics providers.
After stepping back during the earlier phase of market uncertainty following the imposition of tariffs by the U.S., these logistics service providers have re-entered the market with conviction, driving a notable pickup in leasing volume and helping to anchor a broader improvement in demand.
This year-end momentum has carried into 2026, though activity has moderated somewhat in recent months. Market participants increasingly point to the impending renegotiation of CUSMA, the Canada-United States-Mexico Agreement, a free trade pact among the three North American countries that took effect on July 1, 2020, replacing NAFTA.
Uncertainty over the impending renegotiation is said to be a key source of hesitation, particularly among larger, trade-sensitive occupiers. With the timeline for clarity over the agreement's future structure now within sight, many tenants appear to be delaying major real estate decisions in favor of a near-term, wait-and-see approach.
Even so, the increased leasing activity observed at the end of last year provides an important signal for the trajectory ahead. Whether CUSMA is ultimately renegotiated or continues under its current uncertain status quo, the re-engagement of demand in late 2025 suggests a foundation for a more material pickup in leasing activity in the latter half of this year.
The recent slowdown appears to be less indicative of weakening in demand and more reflective of timing, as occupiers await clarity around a key policy inflection point.
At the same time, lease structures are beginning to shift in a way that points to improved landlord leverage. The prevalence of five- to seven-year lease commitments over the past year marks a clear departure from the prior two-year period, when one- to three-year terms dominated.
This transition toward longer lease terms suggests growing confidence among industrial tenants and a gradual rebalancing of negotiating power, as market conditions move away from the recent tenant-leaning equilibrium.
CoStar Analytics
Ben Haythornthwaite joined CoStar in early 2024 as director of market analytics, focused on The Greater Toronto Area and the Greater Golden Horseshoe. He has over a decade of experience spanning residential and commercial brokerage, appraisal, investment management, advisory and analytics. Before joining CoStar, Ben managed the global real estate analytics team at an institutional investment manager, overseeing reporting and providing insights on over $20 billion in real estate assets worldwide.
He is a member of the Royal Institute of Chartered Surveyors and holds a degree in Property Economics from the Dublin Institute of Technology, and a Data Science in Real Estate certification from the Massachusetts Institute of Technology.
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