Crestpoint buys Amazon's Barrhaven fulfilment centre from Broccolini for $494M

Amazon Barrhaven warehouse
Amazon's 2.8-million-square-foot fulfilment centre opened in 2021 at the Citigate Business Park in Barrhaven. Photo courtesy Crestpoint Real Estate Investments

Fresh off its deal late last year to buy a 50 per cent stake in one of Ottawa’s largest office complexes, Toronto-based Crestpoint Real Estate Investments has upped the ante by acquiring Amazon’s Barrhaven fulfilment centre for nearly half a billion dollars.

Crestpoint said this week it purchased a 90 per cent stake in the 2.8-million-square-foot warehouse at 222 Citigate Dr. from developer Broccolini for $494 million. The Toronto firm acquired the property on behalf of clients that include the Crestpoint Core Plus Real Estate Strategy, Vestcor Inc., and Kiwoom Securities and Hangang Asset Management, a South Korean investment consortium.

The five-storey building, which has a floorplate of more than 450,000 square feet, was completed last year at a cost of $200 million. Designed to handle more than 100,000 packages a day, it’s the largest facility of its kind in Canada and a key distribution hub for Amazon, which holds a 20-year lease on the property.

Crestpoint’s head of investments, Elliott Altberg, said the company has partnered with Broccolini on other projects for Amazon in the past – including the e-commerce behemoth’s one-million-square-foot warehouse in Ajax that opened last year – and jumped at the chance to add the Barrhaven property to its portfolio. 

"For us, it kind of (ticks) all the boxes. It’s just a really stable investment opportunity."

“For us, it kind of (ticks) all the boxes,” he said. “It’s just a really stable investment opportunity.”

The deal comes amid surging demand for industrial space in Ottawa as Amazon and other e-commerce companies look to capitalize on the region’s proximity to Toronto and Montreal to help them satisfy growing demand for same-day deliveries to consumers in Canada’s two largest cities. 

In addition to occupying the Barrhaven facility, Amazon leases a one-million-square-foot warehouse on Boundary Road that opened in 2019 and was also built by Broccolini. The Montreal-based developer is also planning to construct a 700,000-square-foot distribution centre for Amazon in North Gower, a project that’s now under appeal to the Ontario Land Tribunal.

With space at a premium, Ottawa’s industrial availability rate dropped below two per cent in the fourth quarter of 2021, according to CBRE, while net rents jumped to a record $12.15 per square foot, up from $11.94 at the end of September.

Altberg said the capital’s booming industrial sector is a sign of the times as online retailers scramble to find the most cost-efficient locations to store and ship products to an expanding customer base.

E-commerce boom

“We’re all kind of transitioning our lifestyles and e-commerce is a beneficiary of that,” he said. “Ottawa is close to a whole bunch of population (centres). There’s a lot of reasons why people want to be in Ottawa and a lot of large (institutional investors) are looking to grow (their footprints) in Ottawa.”

The acquisition is Crestpoint’s second $100-million-plus transaction in the capital in less than three months. In November, the company purchased a 50 per cent stake in the Place de Ville office complex for $175 million

Like the Barrhaven distribution centre, Place de Ville has a blue-chip tenant locked up for years to come in the federal government, which occupies about 85 per cent of the 1.17-million-square-foot property.

“I think these are core buildings in core locations first and foremost, but they’re (supplemented) by cash flows and (tenants) that are stable and have been there for quite some time,” Altberg said of the Place de Ville and Amazon deals.

Besides three highrises and a four-storey podium, another key asset traded hands in the Place de Ville agreement – a surface parking lot on a prime piece of downtown real estate.

While Crestpoint’s growing Ottawa portfolio also includes a 50 per cent stake in a 26-storey office tower at 234 Laurier Ave. W. as well as three office buildings in Kanata, the firm has yet to venture into the capital’s multi-residential market. Altberg said that could change now that the company owns development-ready land in the core – a scarce commodity in Ottawa.

“That will provide us an opportunity over the medium term to go ahead and develop multi-family (units) should we choose that route,” he said. 

“I think we have the best undeveloped parking lot in Ottawa at this point. One of the things that we want to do is get into income-producing multi-family (projects), so that’s an area that we will focus on in the coming years.”