Industrial Warehouse Due Diligence: Clear Height, Loading Docks & Power Capacity Decide Who Can Lease It
Industrial is the one asset class where the listing photos tell you almost nothing and the spec sheet tells you almost everything. Four feet of clear height, two dock doors, one notch of electrical service — each one quietly deletes a whole category of tenant.
What actually decides which tenants can use an industrial building?
Three physical specs do most of the filtering long before anyone discusses rent: clear height (floor to the lowest permanent obstruction), loading configuration (how many dock-high doors versus grade-level drive-in doors), and power capacity (amperage, voltage, and phase together). Each one either admits a category of tenant or removes it entirely. According to Lennard Commercial (2024), newly built Class A distribution centres in the GTA typically run 32 to 36 feet clear — a building meaningfully below that cannot host a modern racking layout at any rent, because the pallets do not fit.
Source: Lennard Commercial — GTA Industrial Net Rents by Clear Height (2024)
I’m Arthur Zhao. With a house, a bad decision can usually be softened with renovation or price. Industrial doesn’t work that way. An industrial building is a machine, and almost all of its value is locked into a handful of numbers you cannot change after closing — how high, how many doors and of what kind, how much power, how much weight the floor takes, whether a trailer can physically turn in the yard. Those numbers are not a description of the building. They are a filter on who is allowed to lease it. Here’s what each one is really screening for, and how to verify it while you still have the right to walk.
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Clear height is a definition problem before it’s a number problem
Height matters because racking stacks. A few more feet of usable height adds an entire level of pallet positions across the whole footprint — you buy cube without buying land, which is the cheapest capacity in the business. That is precisely why a 3PL or e-commerce fulfilment tenant won’t tour a low-clear building no matter what you do to the rent. It isn’t a negotiation. The pallets don’t fit.
Two practical traps: clear height varies within the same building (it’s often lowest near the loading area), so measure at several points; and a future sprinkler retrofit can eat into it further, so ask whether what you measured is the final condition.
Doors: the ratio is the building’s biography
• Dock-high doors sit at roughly trailer-bed height so a forklift drives straight into the trailer. Warehousing, distribution, and wholesale tenants live on these.
• Grade-level (drive-in) doors sit flush with the yard so a vehicle drives into the building. Manufacturers, service shops, contractors, and vehicle-related uses need these.
A 30,000 sq ft building with eight dock doors was built to move freight. The identical footprint with one dock and two drive-ins was built to make or fix things. Those are two different businesses and two different tenant pools wearing the same roof.
Converting the second into the first is not “adding a door.” It means cutting the exterior wall, excavating a dock pit, and regrading the shipping court — structural work with a six-figure starting point and a permit attached. Price that before you assume flexibility you don’t have.
Power: the upgrade everyone assumes is easy
The spread between tenants is orders of magnitude. Lights and a few forklift chargers is nearly nothing. CNC equipment, injection moulding, paint booths, refrigeration, or server loads is a different universe. Cold storage is the extreme case — compressors run at sustained load, not occasional peak, so nameplate intuition badly understates it.
The question that actually matters isn’t “what’s there” but “can it be increased, how long will it take, and who pays.” An upgrade runs through the local utility’s process and can involve a new transformer, a new service run, or even a customer-owned substation. Timelines run in months, and the cost can quietly erase the rent discount that attracted you to the building. One more wrinkle worth flagging: Canadian industrial service voltage does not match the U.S. standard, so equipment bought south of the border may need a transformer to run here — a recurring and expensive surprise for cross-border tenants. Have an electrical engineer verify on site, and get the utility’s position in writing.
⚠️Never infer capacity from a hydro bill. The bill records what the last tenant used, not what the building can deliver. A storage-only tenant may have drawn a fraction of the available service for years. Reading that bill as “power is tight” and reading it as “power is fine” are both expensive mistakes. Read the single-line diagram, photograph the main switch nameplate, and confirm with the utility in writing.
💡 Read the spec sheet as a filter, not a description. Every spec that falls short deletes a slice of your tenant pool — clear height deletes the logistics tenants, dock count deletes the distributors, power deletes the manufacturers. Make all three cuts and you may be left with one or two tenant types who know they’re the only bidders, and price you accordingly. Cheap and hard-to-lease are usually the same fact wearing two hats: the discount you were offered is the tenant pool the building already lost.
The slab, the grid, and the yard
• The slab. Racking uprights concentrate tonnes onto a few square inches of base plate. That’s a point load, not a distributed one, and older slabs frequently can’t take it; the fix is cutting and repouring. The design load is on the structural drawings, in kPa or pounds per square foot. Get the drawings — a verbal assurance is not a spec. Flatness matters just as much: a tall building with a wavy floor means the tall-mast forklift never safely reaches the top beam, and you’ve paid for height you can’t use.
• The column grid. Bay spacing dictates how racking can be laid out. When the grid and the racking module disagree, aisles get lost to dead space, and a single badly placed column can sterilize an entire run.
• The yard. Trailers need room to swing, drop, and queue. A shipping court that’s too shallow means a 53-foot trailer can’t square up to the door — the building is fine and the site still fails. Distribution tenants measure the yard before they measure the building.
ℹ️Specs get forgiven in a tight market and punished in a loose one. According to CBRE Research (Q4 2025 data), GTA industrial availability sat at 5.0% with average asking lease rates of $16.38 per sq ft following a ninth consecutive quarterly decline, and 7.7 million sq ft under construction. When tenants have choice, the weakest-spec buildings absorb the longest vacancies and the deepest free-rent concessions. Underwrite the downside case, not last year’s rent.
Zoning is a spec too — and it’s a separate approval
Worth separating clearly, because buyers routinely merge them: Ontario’s Building Code (O. Reg. 163/24, in force January 1, 2025, adopting the National Building Code of Canada 2020 with Ontario amendments) governs structure, fire, and life safety. It does not set the commercial clear height or the dock count your tenant actually cares about. Two separate questions, two separate approvals, and passing one tells you nothing about the other.
Buy the specs, not the photos: use the conditional period
Build a due-diligence condition into the offer with enough days to genuinely do this:
• Pull the drawings — structural (slab load, column grid), the electrical single-line diagram, and the site plan.
• Measure clear height yourself, with a laser, at several points, to the lowest obstruction.
• Get the utility in writing on existing capacity, upgrade feasibility, timeline, and cost allocation.
• Confirm zoning permits your use and that the required loading spaces physically fit.
• Bring specialists — a structural engineer, an electrical engineer, and a broker who has actually transacted industrial rather than adapting a residential playbook.
Write the day count, who pays for what, and your right to walk or renegotiate directly into the condition. A seller who resists a real due-diligence window on an industrial building is telling you something worth hearing.
Frequently Asked Questions
What’s the difference between clear height and ceiling height?
Ceiling or roof height is measured to the top of the roof structure. Clear height is measured to the lowest permanent obstruction — sprinkler lines, joist undersides, lights, unit heaters. Tenants design racking against clear height, so it’s the only one that means anything commercially. A listing advertising 32 feet with sprinklers hanging at 28 is common and usually not deceptive — just imprecise. Measure it yourself with a laser, at multiple points, and ask whether the current condition is final.
Can I just add more dock doors later?
Sometimes, but it’s rarely the small job people assume. Adding dock-high loading to a building designed around grade-level doors means cutting the exterior wall, excavating a dock pit, and regrading the shipping court — structural work starting in six figures, plus permits, plus the possibility that your site simply lacks the yard depth to make it work. Price and confirm feasibility during due diligence rather than treating it as an easy future fix.
How do I find out whether a building’s power can be upgraded?
Ask the local utility (Toronto Hydro, Alectra, or whoever serves the site) directly and in writing — existing service capacity, what it can be increased to, the timeline, and who bears the cost. Upgrades can require a new transformer, a new service run, or a customer-owned substation, with timelines measured in months. Meanwhile have an electrical engineer read the single-line diagram and inspect the main switch on site. If you can’t get it in writing, don’t put the upgrade in your pro forma.
Is an older, low-clear-height building always a bad buy?
No — but it has to be priced against the tenant pool it can actually reach. According to Lennard Commercial (2024), new Class A distribution product in the GTA runs 32 to 36 feet clear, so a meaningfully lower building won’t compete for modern logistics tenants. It can still suit light manufacturing, contractors, service uses, owner-occupiers, or tenants buying location rather than cube. Note also that per CBRE Research (Q4 2025 data), GTA availability was 5.0% with asking rents down for a ninth straight quarter — in a softening market, weaker-spec buildings sit empty longer. Underwrite that, and the deal can still work.
Arthur Zhao
Real Estate Broker · FRI · ABR · SRS · PSA · MCNE · E-PRO · CLHMS & GUILD Elite · REAIS
VP & Branch Manager, Bay Street Group Inc.
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