Real Estate News

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

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,” 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

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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

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