MONTREAL — The Amazon sort centre known as YUL9 is a model of the engineering and tech-enabled logistics typical of the company. On roughly 6.5 hectares of former farmland west of Montreal, about 500 workers and a fleet of Amazon robots perform the relentless, freakishly efficient dance that has helped make the e-commerce multinational one of the most successful companies the world has ever seen.

Yet while it is a sizable link in Amazon’s distribution chain, Amazon itself doesn’t own YUL9. In fact, Amazon doesn’t own any of the real estate that houses its Quebec operations. Instead, the company leases its properties by way of sometimes-complicated, often-octopussian, always-secretive third-party agreements.

And what is true in Quebec is true practically everywhere else: despite having some US$86 billion in cash sitting in its coffers, Amazon rarely owns the sites of its operations. Because of its size, and the speed of its growth, the company’s rent-not-own strategy hasn’t only jolted awake the province’s long-dormant industrial real estate market, it has also improved the bottom lines of various REITs, property managers, public pension funds and construction firms. 

Take YUL9. The site, located in the town of Coteau-du-Lac (pop. 7,610) in the municipality of Vandreuil-Soulanges, was purchased in November 2020 for just over $9.5 million by Serpico Limited Partnership and Serpico Coinvest Limited Partnership, two entities founded less than three months before the deal—and whose president, Joseph Broccolini, is the executive vice-president of Broccolini, one of the largest construction firms in the province.

Broccolini developed the site in a hurry, to say the least. It took a little over a year to turn that  farmland into what the company hailed as the “most advanced robotics facility in the country.” Less than four months later, Broccolini sold all but 9.9 per cent of the Coteau-du-Lac site—not to Amazon, mind you, but to “QR AMZ Coteau-du-Lac Holdings Inc.,” an oblique-sounding entity controlled by QuadReal, the real estate arm of British Columbia’s public pension fund.

The sale price: $118,751,800. The remaining 9.9 per cent remained with Serpico Coininvest, meaning British Columbia’s public pension fund and a big Quebec construction firm now owned a cog on one of Amazon’s many wheels.

Broccolini has ownership stakes in a pair of other Amazon properties in Quebec. Through Transmont Development and Investors Real Property Fund it owns an Amazon distribution centre known as YUL2 and, through two other Broccolini entities, a last-mile sortation centre known as DXT5—which Broccolini also built.

Having Amazon as a tenant has been lucrative for Broccolini. “For developers, it takes a lot of the risk out of leasing,” said Michel Deslauriers, director of the Jonathan Wener Centre for Real Estate at Concordia’s John Molson School of Business. “Before, if you were lucky, you signed some leases before but probably not for the entire space. But with Amazon, developers can build these huge spaces and Amazon takes it all.”

YUL9 is located about a 60-kilometre drive outside of Montreal. The popularity of exurbia for logistics businesses like Amazon—close and accessible enough to Montreal yet far enough away from the city’s upsized rental rates—has had a marked effect on the availability and price of real estate. Vacancy rates for industrial space in Vaudreuil-Soulanges, home to Amazon and other similarly huge distribution centres for Canadian Tire and FedEx, have decreased by more than 90 per cent and prices have increased by nearly 38 per cent since 2018, according to CBRE data. “Amazon has taken an asset class that was shunned by institutional investors and made it an in-demand, quality asset,” Deslauriers told me. 

What Amazon asks for (and gets) in return is discretion. Broccolini chief of staff Corry Kelahear said “confidentiality agreements” with Amazon prevented the company from discussing Broccolini’s involvement. 

Meanwhile, QuadReal was almost comically reticent to speak about its deal with Amazon. Company spokesperson Susan MacLaurin at first told me that QuadReal’s only Quebec investment was in a Montreal-area Walmart. When I pointed out that this wasn’t altogether true, MacLaurin thanked me for reminding her of QuadReal’s other Quebec holdings. She then said she couldn’t answer any more of my questions—either about Coteau-du-Lac or the Montreal-area Amazon sort centre QuadReal also co-owns with another Broccolini-affiliated entity. 

Among the other conspicuous non-commenters is Montoni, the construction company that built Amazon’s data centre in the Montreal exurb of Varennes which founder and CEO Dario Montoni now owns by way of a numbered company. Ditto Choice Properties, the real estate income trust controlled by the Weston family of Loblaw fame, which owns another delivery station in Laval. Ditto Toronto-based real estate development and management company Pure Industrial, the owner of the Amazon sortation centre in St-Hubert, Que.  

Amazon’s reputation for discretion is well established. It took my colleague Catherine McIntyre nine months (and $34,479 of The Logic’s money) to make public a series of documents from its fight against a unionization drive by Ontario delivery drivers working for the company. One of the many things that comes through in Catherine’s reporting, apart from the methods behind Amazon’s efficiency obsession, is just how reluctant people are to speak about the company on the record for fear of falling out of its favour.

You can understand why those who build and manage Amazon’s facilities are happy to play by its rules. For years it has been a blue-chip tenant with a voracious appetite for square footage. Amazon, meanwhile, doesn’t have to bear the cash outlay and commitment that comes with ownership. “Amazon can get into more square footage more rapidly and then has more optionality long term to remain in space or adjust, relative to owning,” as Jack O’Leary from e-commerce consulting firm Edge by Ascential told me.

Yet this binge shows signs of slowing. As my colleague David Reevely recently reported, Amazon bought, not leased, its three Toronto-area properties. Blame skyrocketing leasing prices, fast-rising interest rates—or the developers themselves. “[Amazon is] just tired of developers and institutions making a shit ton of money on their credit,” one frustrated developer told Bisnow last October. And with the company admitting on earnings day a few weeks ago it now had “too much space,” the leasing bonanza for Quebec developers might be coming to an end. 

Martin Patriquin is The Logic’s Quebec correspondent. He joined in 2019 after 10 years as Quebec bureau chief for Maclean’s. A National Magazine Award winner, he has written for The New York Times, The Guardian, The Walrus, Vice, BuzzFeed and The Globe and Mail, among others. He is also a panelist on CBC’s “Power & Politics.” @MartinPatriquin