In the world of real estate, most people are familiar with the concept of pre-construction condos—if we’re talking about residential towers. However, there’s a rising sector that has been quietly attracting smart investors: pre-construction industrial condos. These smaller industrial units—often ranging from 1,000 to 5,000 square feet—combine the benefits of commercial property ownership with the streamlined buying process of traditional condo developments.
But how exactly do they work? What makes them different from standard residential builds or large-scale warehouses? And more importantly, why are many investors (and businesses) choosing pre-construction industrial condos right now—especially in the Greater Toronto Area (GTA)? Let’s break it all down.
1. Understanding Pre-Construction Industrial
Defining the Product
When we talk about pre-construction industrial condos, we typically mean smaller-sized industrial units sold individually within a larger complex. Instead of purchasing a massive 100,000-square-foot warehouse, buyers can opt for 1,000 to 5,000 square feet (sometimes up to 10,000), which they own as a “condo”—complete with a separate title and shared ownership of common elements.
This model appeals to two main groups:
- Investors looking for an industrial space that offers high returns through commercial leases, but who don’t want the huge capital outlay of larger properties.
- End-user businesses—like contractors, small-scale manufacturers, and local distributors—seeking to own rather than lease their operational space.
Similarities to Residential Condos
- Condo Structure: Just like a residential condo, there’s typically a condo board that manages common elements—parking lots, roofs, exterior lighting, snow removal, and landscaping.
- Deposit and Construction Timeline: Buyers put down a deposit to secure their unit, which is built over a fixed timeline.
Differences from Large Warehouses
In contrast to massive industrial parks, these smaller industrial condos are designed for more niche or specialized uses. In the GTA, where land is at a premium, developers capitalize on the high demand for smaller, flexible spaces by building multi-unit complexes. For buyers, the result is often a more accessible price point (sometimes in the $600,000 to $1 million range).
2. Life Cycle & Development Timeline
Shorter Construction Cycles
While a high-rise residential condo might take 3 to 5 years from sales launch to completion, pre-construction industrial projects can often finalize in 1 to 2 years. Industrial spaces typically require less complex plumbing, wiring, and interior finishing—each unit is delivered in a “shell” state, which businesses or tenants can customize to their needs.
Phases of Development
- Land Acquisition & Permits: Developers secure industrially zoned land and obtain necessary permits.
- Sales Launch: Buyers place deposits; often 20-25% is required for commercial deals, though terms can vary.
- Construction Period: Shell building construction, roofing, HVAC, and common elements are completed.
- Occupancy & Condo Registration: Buyers get the “green light” to move in or lease out once final inspections and city approvals are done.
Why Speed Matters
For investors, time is money. The sooner a project completes, the faster you can collect rent or sell the unit at a profit. With industrial demand still outstripping supply in many parts of the GTA, a project that wraps in 18 months might align well with businesses looking to relocate or expand in the near term.
3. Location Sensitivity
Why Industrial Location is Key
Location is crucial in any real estate, but industrial properties take it a step further. Proximity to major highways (like the 401, 407, or the QEW in the GTA) can make or break a deal for certain businesses. Tradespeople, manufacturing plants, and distribution hubs want easy in-and-out access for both employees and shipping routes.
Urban vs. Suburban Sites
Some industrial condos are situated in established industrial parks on city outskirts, while others might be closer to urban centers. Businesses that need quick access to downtown Toronto may prefer sites nearer the core, but land scarcity has driven many developments eastward to places like Pickering or westward to Mississauga and Milton. Each location carries different pricing, so careful cost-benefit analysis is essential.
How Industria Guides Clients
As a company specializing in GTA industrial real estate, Industria frequently advises clients—both end-users and investors—on location feasibility. We look at factors like neighboring businesses, local zoning rules, traffic flow, and average lease rates. By approaching pre-construction industrial condos with detailed market data, clients can choose the right spot to ensure stable long-term returns and tenant demand.
4. Cost & Financing
Purchase Price & Deposits
- Range: Pre-construction industrial condos often start around $600,000 for a 1,200–1,300 square-foot shell unit, though prices vary by location and project quality.
- Deposit Structure: Commercial developers often require 20-25% over a shorter time frame (e.g., 6–12 months). This is a bit more aggressive than residential condo deposits but significantly lower than buying a full-scale industrial building outright.
Commercial Financing
Financing can be more nuanced than residential mortgages:
- Higher Down Payments: Typically 25–35% for investment properties, unless you occupy the unit for your own business, which can sometimes qualify for special programs (e.g., BDC financing).
- Shorter Amortizations: Instead of 25+ years, you might get 15–20 years.
- Interest Rates: Commercial rates can be slightly higher, depending on the borrower’s financials and the building’s projected cash flow.
The Role of Industria
Industria assists clients in navigating the financing landscape, suggesting reputable lenders, clarifying deposit timelines, and helping them structure their deals. If a client’s business will occupy the space, there may be added benefits or considerations to reduce costs and maximize ROI.
5. Exit Strategies
Buy-and-Hold for Rental Income
Many pre-construction industrial buyers plan to lease out the finished units. The advantage of an industrial triple net lease is that the tenant often covers property taxes, insurance, and maintenance, leaving the owner with relatively predictable cash flow. Vacancy rates in industrial real estate remain low, so finding tenants can be easier—especially in prime locations.
Assignments & Selling Before Completion
Some investors like to assign their pre-construction contracts if the market heats up. Because developers often price these early units at or just below current resale rates, there can be an arbitrage opportunity to sell the contract at a premium near project completion. However, always check assignment clauses and fees in your purchase agreement.
Selling to End-Users
Once a pre-construction industrial condo is completed, local businesses that need space immediately may be willing to pay top dollar. Tradespeople, distributors, or light manufacturers might prefer to own rather than lease—especially in an area where industrial rents have soared. As the original buyer, you could profit from the difference between your pre-construction price and the higher market value at the time of closing.
6. Why Pre-Construction Industrial Is So Appealing Right Now
Market Shortage
Vacancy rates for industrial spaces in the GTA hover around 1-2%—extremely low for any commercial market. Such scarcity drives up rents and sale prices. By securing a pre-construction deal, investors can lock in today’s prices and benefit from tomorrow’s market conditions.
E-Commerce Boom
The pandemic accelerated e-commerce, a trend that shows no sign of slowing down. Online retailers, delivery services, and fulfillment centers all need local warehousing. That fuels demand for smaller industrial units closer to population centers—exactly what pre-construction industrial condos provide.
Flexible Uses
From manufacturing to storage, repair shops to service providers, an industrial condo’s “shell” layout makes it highly customizable. Compared to a traditional retail or office environment, the open-plan design and higher ceilings allow tenants to personalize the space for a wide array of uses—another key reason these properties stay in demand.
Professional Guidance from Industria
While the opportunity is clear, stepping into industrial real estate can still feel daunting. Industria has helped numerous clients select the right pre-construction project based on location, pricing, and tenant appeal. By sharing insider insights—from builder reputations to the intricacies of zoning—Industria ensures buyers make well-informed decisions at each stage of the process.
Conclusion: Embrace the New Wave of Industrial Ownership
As the GTA’s industrial real estate market tightens, pre-construction industrial condos stand out as a versatile, profitable option. With shorter construction timelines, flexible usage, and robust market demand, these smaller industrial units check many boxes for investors and end-user businesses alike. Whether you’re seeking stable rental income through triple net leases or looking to capitalize on rising property values, pre-construction industrial condos can open the door to lucrative commercial real estate returns.
If you’re curious about exploring the pre-construction industrial market—especially if you’ve primarily focused on residential thus far—now’s the ideal time to broaden your horizons. At Industria, we specialize in guiding clients through every stage of the process, from identifying prime locations to structuring financing. Connect with us to learn more about upcoming projects, deposit requirements, and the best strategies to maximize your long-term gains. Together, let’s unlock the potential of this rapidly evolving real estate niche.
