Amazon’s bombshell decision to close its operations in Quebec is expected to have a major impact on the greater Montreal-area industrial vacancy market as the retail giant is set to vacate nearly 2.3 million square feet of recently built warehouses in a process slated to start this week.
Amazon said Jan. 22 it would withdraw its operations from the province in a move that would leave nearly 2,000 employees out of a job. Amazon decided to close the distribution facilities following a vote among the 200 workers of the Laval operation to join the Confédération des syndicats nationaux, of CSN, labour union last spring.
The Laval workers did not come to terms on a collective bargaining contract with Amazon, and according to Quebec law, the provincial government could have imposed arbitration on the two sides and forced Amazon into an agreement against its will.
Amazon has confirmed that Intelcom, a Montreal-based third-party logistics delivery company that Amazon has employed in the past to deliver its goods to consumers, is expected to take over some of deliveries from the laid-off Amazon employees.
"We have long-standing relationships with third parties across the province and look forward to working with them to continue offering our customers the same great service," Amazon spokesperson Barbara Agrait said in an email to CoStar News.
The CSN labour union has bitterly denounced the closures in a series of press releases and urged a general boycott of Amazon products.
"They're not fooling anyone," CSN president Caroline Senneville said this week. "The only reason for Amazon to have a different business model just for Quebec is that there's a union here and an arbitrator could have imposed a first collective agreement as early as the summer of 2025."
Amazon does not own its Quebec facilities and said it will cooperate with the property owners as it shuts down operations at the facilities. "As we complete this process, our team will work with relevant landlords – as they do any time we exit a leased facility – to determine what’s next for them," Agrait said.
Intelcom is not expected to lease the existing Amazon facilities that range in size from 120,000 square feet to 475,000 square feet.
Vacancy rate impact
Amazon's departure from the facilities will add 2.25 million square feet of industrial space to the Montreal-area industrial market and increase the local total sublet space to a record 4 million square feet, according to a recent report from CBRE.
The local availability rate would increase to 6.1%. The addition would increase the sublet component of the total available market space for the greater Montreal area to 18.47%, according to the report.
Intelcom, a Quebec-owned company founded in 1986 by Daniel Hudon, occupies what it describes as stations across Canada, including roughly 15 in British Columbia, 10 in Alberta, 27 in Ontario and 22 in Quebec.
Intelcom recently leased 20-year-old industrial facility at 3400 Raymond Lasnier, in the Saint Laurent borough of Montreal. Intelcom leased roughly three-quarters of the 475,000 square foot industrial facility from Montoni in November and took possession on Jan. 1, according to CoStar data.
Sources indicated that Intelcom has also recently leased another property near Highway 440 in Laval. Intelcom did not immediately respond to requests for confirmation, and the property owner declined to comment when contacted by CoStar News.
After the spurt of builds between roughly 2020 and 2021, Amazon stopped its Quebec expansions and backed out of a plan to build another facility in the Montreal area.
Amazon employed over 16 times as many workers in Ontario than in Quebec, in spite of the Ontario population being only 56% larger than Quebec. In terms of numbers of workers in the two provinces, Amazon employed 25,000 workers in Ontario and 1,500 in Quebec, according to its website.
The Amazon facilities slated to close are:
- 80 Leon Malouin, Coteau du Lac, YUL9, opened October 2021; to close March 22, 356 employees;
- 1100-1200 Norman, Lachine, DTX6, opened in 2021, to close February 8, 319 employees;
- 5799 Airport Rd Longueuil, HYU1 opened in October 2020, to close February 8, 38 employees;
- 5799 Airport Rd Longueuil, YUL5, opened October 2020, to close February 15, 371 employees;
- 3399 Francis Hughes Laval, DXT5, opened July 2021, to close February 8, 268 employees;
- 3000 Louis A Amos Lachine, YUL2, opened in July 2020, to close March 15, 358 employees;
- 5555 Ernest Cormier DXT4, opened 2020, to close February 8, 287 employees.