CBRE Helps Lactalis Canada Secure a New Distribution Centre in Oshawa, Ontario

Distribution centres were the industrial market darlings during the pandemic, as online shopping hit a peak.

For those who thought the DC market might have cooled following a period that had few big splashy transactions, CBRE’s Kyle Hanna would beg to differ.

Hanna, along with his Toronto West colleague Fraser McKenna, just closed on a deal that saw their client Lactalis Canada (Canadian dairy leader of brands like Cracker Barrel, Black Diamond, Balderson, Astro and Lactantia) ink a long-term lease on a state-of-the-art new distribution centre in Oshawa, Ontario. 

The 379,000 sq. ft. facility – which will consolidate multiple Lactalis shipping locations that are used to service the company’s cheese and tablespreads category – is being developed, built and property managed by Broccolini.

Construction has already begun and the distribution centre is slated to open by Q4 2024.

“Broccolini has been tremendous,” says Hanna. “They have moved mountains to get this deal done.”

Lactalis Group’s Largest

Located in Oshawa’s Northwood Business Park, Lactalis Canada’s new DC was designed in part by Montreal’s GKC Architecture and Design.

It will become the largest distribution centre, capacity-wise, for France-based Lactalis Group globally, notes Lactalis Canada President and CEO Mark Taylor.

“This bold step exemplifies Lactalis Canada’s growth ambitions in Canada as a dairy leader and more importantly, reinforces our continued commitment and investment in the country and communities in which we operate,” Taylor says.

Hanna says the DC is being built on raw land and that Broccolini had done much of the servicing and zoning work already before Lactalis Canada put pen to paper.

While Oshawa isn’t a distribution hotbed just yet, Durham Region has been growing as an industrial hub in recent years, and Hanna says his team has done a number of deals in neighbouring Ajax and Whitby.

The new Lactalis facility will create approximately 80 jobs in Oshawa and its surrounding region, employees who will join Lactalis Canada’s workforce of more than 4,200 across 30 operating sites in Canada.

“The GTA is the optimal hub for this part of our supply chain network across Canada,” says Eric Seguin, Senior Vice President, Supply Chain, Lactalis Canada. “The Oshawa distribution centre is poised to meet the current needs and future demands of our business and customers.”

Sustainable Design

The DC’s sustainable design will “transform our company’s network effectiveness and contribute to Lactalis Canada’s ESG agenda in reducing its carbon footprint,” Seguin says.
The building will be zero-carbon ready, with the potential to be Zero Carbon Building certified. Its energy will be fully on the Ontario power grid with no additional reliance on non-renewable sources.

Use of energy efficient lighting controls, equipment and high insulation values will reduce the power load imposed on the refrigeration system.

Heat generated from the refrigeration system will be fully reclaimed and used to heat the facility’s offices and the truck apron to melt snow for safety reasons.

A white roof will reduce heat island effect, and solar panels on the roof in a future phase of development will provide renewable power to partially or completely offset reliance on the power grid under certain conditions.

The new Oshawa distribution centre will be Lactalis Group's largest DC capacity-wise in the world.

Site Selection Process

Hanna says the greatest challenge his team faced in getting the deal done was running an extensive search process to find a development site that met his client’s timing and exact building configurations.

“Knowing that Lactalis Canada had a firm lease commencement date it wanted to achieve, the entire team of developer, architect, and tenant worked extensively to move through the design, value engineering and legal process to allow this deal to come together.”

Adds CBRE’s Fraser McKenna: “We had to find a developer that had the full conviction and the wherewithal to get it done on time, and we believe Broccolini will make that happen.

“We’ve done a number of deals with them in the last few years,” Hanna says, “and they are great at executing complex build-to-suit developments as well as finding creative solutions for tenants.”

McKenna notes that the City of Oshawa helped make the approvals process a smooth one.

“At a time when so many municipalities are bogged down in red tape, we moved through a lot of the approvals and due diligence quickly, which will provide a straight forward path for the construction of this development.”

DC Deals

There’s still plenty of action in the distribution centre market at the moment, according to Hanna.

“We’re doing a lot of deals; it’s been very busy,” he says. “It’s just that we’re coming out of what was an unsustainable peak in the market and going back to more of a normalized industrial market.”

“We are returning to a more balanced market although overall supply levels in the GTA remain the lowest in North America,” adds McKenna.

“Conditions are similar to the period from 2011 up to 2019, pre-pandemic. But there are still a lot of larger deals out there.”

In the case of the Lactalis Canada deal, Hanna says it speaks to the fact that bigger users are looking to become as efficient as possible with their operations.

“They’re consolidating into a sustainable central DC versus having many different sites spread out across a region.”