spaces Prologis Europe Magazine
L’ORÉAL’S NEW LOGISTICS PLATFORM EUROPE’S MOST DESIRABLE LOGISTICS LOCATIONS
PLUS: BACK TO THE FUTURE LOGISTICS: 1983-2013 TWO NEW CLASSES FOR LOGISTICS PROPERTY AIRTIGHT SOLUTIONS FOR SAVING ENERGY GLOBAL MARKETS: DEMAND FOR DEVELOPMENT and THE PROLOGIS PATH TO SUSTAINABLE GROWTH
IN T A BR
YE 0 3 G
P F O RS
G O L RO
contents europe’s huge potential
two new classes for logistics property
europe’s most desirable logistics locations
l’oréal’s new logistics platform
insider insight: poland
back to the future: logistics 1983-2013
global markets: demand for development
the prologis path to sustainable growth
airtight solutions for saving energy
the mermaid and the midnight man
exciting times for northern europe
prologis 30 year celebration, pier 1 history
Published by Prologis Europe, October 2013 Symphony Offices, Gustav Mahlerplein 17-21, 1082 MS Amsterdam, the Netherlands
About Prologis. Prologis, Inc., is the leading owner, operator and developer of industrial real estate, focused on global and regional markets across the Americas, Europe and Asia. As of June 30, 2013, Prologis owned or had investments in, on a consolidated basis or through unconsolidated joint ventures, properties and development projects expected to total approximately 563 million square feet (52.3 million square metres) in 21 countries. The company leases modern distribution facilities to more than 4,500 customers, including manufacturers, retailers, transportation companies, thirdparty logistics providers and other enterprises.
europeâ€™s huge potential Prologis is celebrating its 30th anniversary this year, having been founded in the US in 1983. In Europe we are a little younger. We started in our office near Amsterdam in July 1997 and five months later we became a major player when we acquired Swedenâ€™s Frigoscandia, which was a provider of refrigerated distribution services. The logistics market developed fast, and in 2002 we began to dispose of our temperature controlled logistics operations in order to focus on the business of developing, owning and managing state-of-the-art distribution facilities. Today, logistics property in Europe is very much in vogue. The occupational market has been remarkably resilient over the last four-and-a-half years in contrast to most other property sub-sectors. Demand for modern facilities has held up very well supported by the ongoing supply chain reconfiguration and consolidation with users striving for greater levels of efficiency and improved access to their customers. That trend will continue, combined with new demand from e-commerce companies that presents us with significant incremental demand as the sector is set for significant growth in the years ahead. In many of our markets and most notably the UK, there is a significant lack of supply, which is limiting the choice for our customers. Combined with a recovery in rents in some select global markets in the UK, we have the confidence to begin a measured programme of speculative development to soak up the demand that continues to look for the best location and quality product solutions.
Today, those markets are the West Midlands and in the east, Prague and Bratislava, which are all running at very high levels of occupancy. We have seen a very robust recovery take firm grip in the US and I believe that Europe could soon follow. The UK is well on its way and the continent is seeing some strong signs of recovery emerge in Germany and some select central European markets. The US logistics market is an important barometer for us. It has four-and-a-half times more modern space than Europe, and serves a slightly smaller population and overall market. The potential for the logistics real estate market in Europe is significant. It plays to our strengths - a market leading team of professionals throughout Europe, ensuring we can be there to meet our growing customer needs while delivering superior returns for our investors. Âś
Philip Dunne President Europe, Prologis
TWO NEW CLASSES FOR LOGISTICS PROPERTY Rapidly evolving procurement and occupier needs mean the international real estate market is playing catch-up. The continued consolidation of the worldâ€™s largest businesses, coupled with the explosion of internet shopping has resulted in new distribution channels to market, and two new classes of property.
spaces customer column
Paul Graham, Senior Vice President of Corporate Real Estate EMEA at DHL
This column first appeared as a blog on Propertyweek.com, 8 August 2013
Secondly, there is growing recognition of the advantages of cross-dock facilities, when stock is loaded from incoming vehicles onto outgoing ones with reduced, or sometimes no, storage time in-between and the emergence of Parcel Delivery Centres as a specific asset class. With consumers expecting everhigher standards of service, we know that occupying distribution space close to the final point of consumption is more important than ever for our customers. These new and complementary asset classes have the potential to enable retailers to better meet consumer demands, and significantly improve the efficiency of their supply chains.
So where are we now? There is an emergence of these two new distinct asset classes, but there is no supply. Speculative development, which collapsed during the global financial crisis has not yet recovered in Europe, but occupier demand must be met. Partnering with occupiers to provide the facilities they need is the logical evolution to bridging this gap. A major fashion retailer recently turned to DHL to open a 40,000 square metre logistics center in Mönchengladbach, Germany, to serve stores in the Netherlands, Belgium, Germany and Austria. Small and medium-sized companies are getting in on the act too. On the outskirts of Milan, Italy, DHL owns and operates two mega warehouses that bring the benefits of flexible manpower, good transport links and the synergies of a big site to those customers which wouldn’t have the scale alone. Progress is being made, but in a world that is capital and debt constrained, occupiers have to collaborate differently with the real estate industry and forge new working partnerships to secure the buildings they need. ¶
Bigger really is better for many companies
Firstly, we’ve seen a move to mega warehouses. Bigger really is better for many companies, with traditional warehouse networks consolidated into a centralised hub, supplying huge regions and delivering massive economies of scale. The FMCG and retail sectors have been early adopters of such sites, to help service their rapidly growing online customer base as quickly as possible. The benefits are clear, with higher density storage, the latest technology for barcode scanning, voice picking and automation, mega warehouse are extremely efficient and cost effective.
EUROPE’S MOST DESIRABLE LOGISTICS LOCATIONS Locations identified by 2013 rankings Inset
3 7 1
Europe has a larger population and a higher combined Gross Domestic Product (GDP) than the US, but with 4.5 times less Class-A logistics space, there is significant room for new product to enter the market. With steady demand driven by the reconfiguration of the European supply chain and the rise of e-commerce, developers, owners, managers and their customers are asking which logistics locations make strategic sense. To answer this question, Prologis’ in-house research team — working in partnership with Eyefortransport — recently published a report, Europe’s Most Desirable Logistics Locations, which reveals the top 10 most desirable logistics locations in Europe from an occupier perspective.
Venlo, a logistics market in the south-east of the Netherlands near the German border emerges as the clear winner. In second place is the Antwerp-Brussels area in Belgium and in third Rotterdam, the major port in the west Netherlands. Behind the three Benelux powerhouses are the German area of Rhein-Ruhr and the Spanish capital, Madrid, in fourth and fifth places respectively. The report also ranks the most sought after logistics locations of tomorrow. “We wanted to explore how sentiment would change
over the next five years,” explains Ali Nassiri, Vice President, Head of Research & Strategy Europe. “Interestingly, Venlo will remain the most popular location, although its sizeable lead over the next three most favourite locations will narrow. Among the top 10 locations, Pan-Regional Romania, Ile-de-France and Frankfurt am Main will gain most in popularity by 2018 but it is also worth noting that some Central and Eastern Europe markets will gear up and become more attractive.”
2018 1 Venlo 2 Rotterdam 3 Antwerp-Brussels 4 Rhein-Ruhr 5
5 Pan-Regional Romania 6 Ile-de-France 7 Madrid 8 Liège 9 Frankfurt am Main 10 Central Germany
IN VENLO In Venlo, Prologis operates 107,000 sq m out of a total 1.3 million sq m. In 2012 the company signed leasing agreements totalling 38,200 sq m, more than half the total stock leased in Venlo that year.
A total of 160 occupiers of logistics property from a variety of sectors, ranging from retail to automotive to pharmaceuticals, ranked 100 distribution locations by the following criteria: •
Proximity to customers and suppliers
Availability of labour and the flexibility of government
Availability of land/existing warehouses and real estate costs
Quality and proximity to infrastructure, including economic networks and strategic transportation access logistics property occupiers continue to consolidate their operations in larger more efficient centres and plan to operate in larger networks, the report goes on to show. Almost two-thirds of the respondents expect to operate in a pan-European network by 2018. Of the 11 key factors affecting distribution network strategies over the next five years, secular drivers of change including global trade, outsourcing and globalisation will be stronger than cyclical ones. Increasing fuel prices will be the biggest single factor, since transport costs are the largest cost component for logistics property occupiers. E-commerce is perceived as the second most important change driver of the next five years. “ The research is of vital importance as it helps our understanding of customers’ current and future distribution requirements,” according to Philip Dunne. ¶
As well as being in-line with our investment strategy, the results demonstrate that we are well-placed to meet demand in Europe’s most desirable logistics markets. Philip Dunne, President Europe, Prologis
EUROPE’S MOST DESIRABLE LOGISTICS LOCATIONS
Prologis Park Venlo
To access Prologis’ research go to prologis.com
L’ORÉAL’S NEW LOGISTICS PLATFORM
L’Oréal has big plans for the future. Over the next ten years, the Group wants to reach one billion new consumers and if their first half 2013 results are any indication, they are making good progress.
spaces customer spotlight Prologis Park Vémars
The facility will be the sixth to be built at Prologis Park Vémars, which is 30 km north east of Paris and 4 km north of Roissy-Charles de Gaulle Airport. It is being designed to be certified “very good” by BREEAM, the world’s leading design and assessment method for sustainable buildings. It will feature several innovations such as a Dynamic Thermal Simulation service, which predicts the thermal performance of buildings and their systems.
Against this backdrop L’Oréal’s French consumer products division, L’Oréal France Grand Public, recently signed an agreement with Prologis for a new 25,100 sq m (270,400 sq ft) build-to-suit distribution centre at Prologis Park Vémars in the Val-d’Oise department of the Îlede-France region in France. As well as being a strategic logistics location, the park makes sense for L’Oréal France Grand Public because its existing logistics platform is also in Val-d’Oise.
We were looking for a modern, environmentally sound and flexible facility, able to constitute our new national logistics platform and answer our needs Frank Privé, Real Estate Director, L’Oréal.
L’Oreals’ sales amounted to EUR 22.5 billion and in the first half of 2013 the Group’s sales amounted to EUR 11.7 billion, an increase of 4.7 percent. In Western Europe L’Oréal recorded growth of 1.7 percent like-forlike, and 1.6 percent based on reported figures – mainly as a result of substantial market share gains by its Consumer Products and Active Cosmetics Divisions. Germany, France and the countries of Northern Europe are all contributing to growth.
In these ways, the Prologis facility will contribute to the success of L’Oréal’s environmental commitments; an area the company has already made huge progress in, having reduced its CO2 emissions by as much as 38.8 percent since 2005. “We chose Prologis’ proposal because of the site’s strategic location close to our present platform, its BREEAM certification and all the necessary operating permits which meet the requirements of our logistics activity.” Welcoming the L’Oréal Group to Vémars François Rispe, regional head of Southern Europe at Prologis, said: “L’Oréal’s trust demonstrates the relevance of our offering in Vémars, as well as our ability to meet specific logistics requirements related to high quality products intended for large retail outlets”. ¶
L’Oréal has been a Prologis customer in Europe since 2006. It currently leases two facilities totalling 33,200 sq m in Central & Eastern Europe. With its new facility, L’Oréal will lease 58,300 sq m in Europe.
INSIDER INSIGHT: POLAND “
Major players are consolidating their supply chains
SVP, Market Officer Poland
VP, Head of Development Poland
VP, Head of Leasing Poland
BM: Looking at the wider European trend, Central & Eastern Europe (CEE) is performing well as major players consolidate their supply chains in the region. We are also seeing stronger demand from our domestic customers. During the first half of 2013, Poland took the lead in terms of our total leasing activity, but other locations around CEE are also performing well. At the end of the second quarter, Wrocław and Poznan in Poland, Prague in the Czech Republic and Bratislava in Slovakia had close to zero vacancy - a positive indicator for the region. EZ: There are a couple of reasons for this. First, growing consumer demand in Poland, Czech Republic and Slovakia, and second, these countries are becoming increasingly attractive for customers looking to optimise their supply chains. Poland, for example, has made huge investments in its transport infrastructure to deliver better connectivity with the rest of Europe. The cost of labour is also dramatically lower than Western Europe.
What trends are you seeing in Poland? BM: Our customers are increasingly looking at their supply chains to provide opportunities to reduce costs. This is translating into increased demand for larger, more modern and strategically located build-to-suit facilities which meet their specific requirements. MC: That’s true. But it’s also important not to ignore the other end of the scale. There are a number of successful smaller businesses which have a need for smaller distribution facilities with larger office space.
What about e-commerce?
Is it true that logistics is shifting eastwards and if so, why?
BM: So as online retail spending continues to grow, we expect to see demand for the logistics property sector to grow with it. That said, e-commerce should be viewed in the context of other structural demand drivers such as increased globalisation, innovation and technology, consolidation, rising energy and transportation costs, and outsourcing of logistics activities to third-party logistics service providers.
Can you give some specific examples of how you delivered excellent customer service? MC: One of our customers was looking to expand their distribution operation, but there was no development potential in their facility or on the park. When we looked at the park as a whole, we found that there was sufficient space but it was spread between the four different buildings, so we decided to approach it like a big puzzle. For three months we renegotiated contracts to accommodate the needs of all the customers at the park, and to consolidate the vacant space into one unit. The customer now has the additional space they needed and everyone else in the park is satisfied as well. BM: We hear a lot from smaller business who are looking for smaller distribution modules and larger office space. All customers are important to us, which is why we plan to develop our “Small Business Units” project at Prologis Park Wrocław III to address these needs. EZ: As well as the usual technical and logistical requirements, we’re seeing that many of our customers are becoming increasingly ‘forward thinking’ with their new facilities. So when one of our customers asked for their new office space to be designed according to the principles of Feng Shui, we were happy to help.
EZ: These are exciting times for Poland and the wider CEE region when it comes to e-commerce. Market penetration and online retail spend per capita are still relatively low compared to the rest of Europe. The economic crisis combined with improved access to the internet means that more and more consumers are taking their search for the best offers from the high street to the web. According to a report by the Centre for Retail Research, online sales in Poland grew 25-30 percent year-on-year in 2012, which makes it the fastest growing market in the EU.
MC: Another customer wanted to install some special equipment in the facility. To make sure it would fit, we developed a solution to reduce the number of columns which would provide more space.
MC: That’s important because our own Prologis research shows that over the last five years every additional EUR 1 billion of online sales resulted in an average additional warehouse demand of 72,000 sq m, or 775,000 sq ft, in Europe’s three largest e-commerce markets, the UK, Germany and France.
For more information about Prologis Central & Eastern Europe: prologiscee.com
EZ: Many of our customers don’t even know about the solutions we develop for them, because we try to anticipate their needs even before they move in. For light manufacturers, for example, we install windows above the dock doors to provide more natural light. ¶
1983 Prologis UK
BACK TO THE FUTURE LOGISTICS 1983-2013
Between 1983 and 2013, global population has grown by 69 percent from 4.3 billion to 7.1 billion. World consumption expenditures per capita have grown by 37 percent from $3,600 to $4,900, and in the same period, the average distribution centre has grown in size by a comparable 38 percent from 46,921 sq ft to 64,586 sq ft. Customers are increasingly consolidating their distribution activities in larger, more efficient facilities strategically located in global and regional markets, in order to improve operational efficiencies. Globalisation of consumption, production and trade feeds the need for larger distribution centres and better transport infrastructure. Globalisation has made its mark, with imports and exports evenly matched and European growth rates close to those of the US. The increase in world trade has had positive effects for the logistics industry as transporting all this merchandise across the globe is one of the services provided by logistics companies; one of the main customer groups for modern warehouses and increasingly important as logistics outsourcing grows.
In order to facilitate these improved good flows, significant investments have been made in road, sea, rail and air infrastructure. For instance, container ships have grown by 565 percent to accommodate 13,000 TEUs1, while private investment in railroad equipment has increased by 87 percent to $115 billion. Air freight volume has grown by a more modest, but still significant 47 percent, despite the rapid increase in oil prices. As Europe has developed over the past 30 years and supply chains have extended to Central & Eastern Europe, consumption per capita has outpaced population growth by a factor of almost 10. As the market for the trade of goods grows, logistics properties are evolving to accommodate the changing needs of the global market toward more modern, efficiently-designed warehouses. This has had a direct impact on our business. Yet even today Europe has 4.5 times less Class-A space than the US despite having a larger combined GDP and population. In this context, we’re seeing a historic reconfiguration of the European supply chain. More recently, the rise of e-commerce has also started to drive demand for modern, efficient distribution facilities.¶
As part of its 30th anniversary celebrations, Prologis has developed an infographic which highlights the evolution of logistics real estate over the past 30 years in the context of growing population, consumption, trade and investment in infrastructure.
logistics properties are evolving to accommodate the changing needs of the global market
Transport Equivalent Unit (20 ft container)
GLOBAL MARKETS: DEMAND FOR DEVELOPMENT With the aim of providing its customers greater choice and flexibility, Prologis in Europe has begun a measured programme of speculative development, focusing on target global markets with low supply, high demand and high occupancy. In the UK Prologis will be building two new facilities that will deliver a total of 49,700 sq m (535,000 sq ft) in prime distribution markets. The first will be a 28,800 sq m (310,000 sq ft) facility at phase two of Prologis Park Dunstable, close to Junction 11 of the M1 in Bedfordshire. Earlier this year, Prologis gained detailed planning permission for two facilities on its 12-hectare Boscombe Road site.
The second will be the construction of a 20,900 sq m (225,000 sq ft) distribution centre at Prologis Park Ryton, near Coventry in the West Midlands. With easy access to the M1, M6, M69 and M40, Prologis’ 39-hectare Ryton site has planning permission for a total of 156,100 sq m (1.68 million sq ft) of distribution space. Both buildings have been designed to achieve BREEAM 2011 ‘very good’ accreditation and the best possible EPC rating for their size, which means that they will be both energy efficient and cost-effective to operate.
Prologis is also developing a speculative building in Central & Eastern Europe, where the company’s portfolio is more than 90 percent occupied and has shown the biggest improvement in leasing since the beginning of 2012. In the Czech Republic, it has already begun construction of a 22,500 sq m (242,200 sq ft) logistics facility at Prologis Park Prague D1 West. The new facility will increase the total leasable area at Prologis Park Prague D1 West and Prologis Park Prague D1 East to 212,000 sq m. ¶
spaces on location
BUILD-TO-SUIT While Prologis is taking a measured approach to speculative development, customer demand for build-to-suit shows no signs of abating as customers seek to consolidate their logistics operations into larger, more modern strategically located facilities.
Prologis Park Prague D1 West
In the UK, Prologis signed a 15,300 sq m (165,200 sq ft) build-to-suit agreement at Prologis Park Ryton with Hi Logistics, a specialist logistics subsidiary of LG Electronics. The new building, which will be Hi Logistics’ first distribution centre in the UK, is also the first building to be let under the terms of the build-to-suit five year lease initiative that Prologis UK launched in 2012. Meanwhile in France, Prologis signed a 25,100 sq m (270,000 sq ft) build-to-suit agreement with L’Oréal (see article on page 8). This was followed by a 32,000 sq m build-to-suit deal at Pays de Meaux in Villenoy, Seine-et-Marne. C&A will consolidate its current operations into the new facility, which will serve as the company‘s new national logistics platform.
Prologis Park Prague D1 East & West
THE PROLOGIS PATH TO SUSTAINABLE GROWTH
Prologis has grown to be the leading global owner, operator and developer of industrial real estate with $46 bn assets under management and a global platform spanning 52.3 million sq m (563 million sq ft). As the company celebrates its 30th anniversary, it can be confident that the scale and quality of its operating platform, the skill set of its global team, and the strength of its balance provides unique competitive advantages.
It hasn’t always been plain sailing — especially during the height of the global economic crisis — but the ‘merger of equals’ between the former ProLogis and AMB in 2011 created an unparalleled global platform with unmatched financial strength. Prologis’ ten quarter plan to simplify the company and build a strong foundation for the future is complete, and the company is focusing on a sensible programme of sustainable growth. This will be guided by a roadmap which includes realising the potential of its land bank and using its global scale to grow earnings.
spaces global focus
Land Bank Globally, Prologis has the potential to build an additional 18.6 million sq m (200 million sq ft) of new development at high incremental returns on land that is already paid for. In Europe the market is characterised by steady demand and limited supply, which is helping the company deliver on its second priority – realising the potential of its land bank. This is already starting to happen. In France, L’Oréal France Grand Public, L’Oréal’s French consumer products recently signed a leasing agreement for a 25,000 sq m build-to-suit facility at Prologis Park Vémars. In the Czech Republic, Prologis is developing a 22,500 sq m (242,200 sq ft), speculatively-developed facility at Prologis Park Prague D1 West, and in the UK it is developing two facilities which will deliver 49,700 sq m (535,000 sq ft) of distribution space in prime markets. ¶
SCALE Another growth opportunity is using the company’s scale to grow earnings. It is continuing to pursue both individual facilities and larger opportunities as they come to market.
In the second quarter of 2013 Prologis acquired a fully leased
12,700 sq m SPEC BUILD PROGRAMME
(137,000 sq ft)
distribution centre in Waalwijk, the Netherlands
Prologis is also starting a measured programme of speculative development. In the third quarter it announced plans for two speculative buildings that will deliver a total of 49,700 sq m (535,000 sq ft) in two prime UK distribution markets. This was followed by the acquisition of a
12,600 sq m (135,600 sq ft)
facility in Tongeren, Belgium and a fully-leased For more information visit: prologisdunstable.co.uk
For more information visit: prologisryton.co.uk
It also announced plans to develop a 22,500 sq m (242,200 sq ft) facility in the Czech Republic.
6,800 sq m (73,200 sq ft)
facility in Hamburg’s highlysought after Billbrook district in the third quarter.
AIRTIGHT SOLUTIONS for saving energy
Heating is one of the most significant energy demands in distribution centres and commercial buildings. By building in quality and applying intelligent construction practices, it is possible to ‘design out’ energy use by optimising the assembly, structure and fabric of a building. One area Prologis is exploring as a means of reducing heating costs is improving the air tightness of its new facilities.
Air tightness can reduce heating costs by as much as 50 percent. It is realisable at relatively low costs and delivers returns which continue throughout the life cycle of the building. Furthermore, actively managing airflow can improve the quality of the working environment for the people working inside the building.
THE PRESSURE IS ON To measure the integrity of a building envelope, the entrance is sealed and the pressure within the building is increased using large fans. This is known as the “blower door” test. The pressure difference between the inside and the outside of the building forces air through gaps around doors and junctions between cladding. The tighter the building (e.g. fewer holes), the less air is needed from the blower door fan to create a change in building pressure.
In the UK, many Prologis facilities achieve air tightness levels that exceed regulatory requirements by over 90 percent. Typically, larger buildings achieve better results than smaller ones because they have larger volume in comparison to the perimeter area (roof and walls).
The measure of the ‘leakiness’ of a building is usually expressed in M3/hour/m2, so a lower figure is better. In Germany, a ‘score’ of 3.0 /hr is acceptable but Prologis buildings regularly achieve 0.5 or lower.
C F E
HIGH STANDARDS “Air tightness is about ‘getting the basics right’,” says Juergen Diehl, Director, Regional Project Management Northern Europe. “Good detailing and workmanship does not necessarily add cost, but getting things right at the building’s conception can reduce costs as retro-fitting air tightness measures to older buildings can be expensive.”
It is important for everyone involved with a building to understand what is involved with airtight construction. The efficiency and effectiveness of the heating and ventilation in the unit depends on carefully designing in sustainability and designing out consumption. ¶
At Prologis we apply everything we learn from each project to the next. This is a key benefit of our long-term relationships with buildings, suppliers, contractors and tenants
Prologis can achieve high levels of air tightness because it works with its supply chain (dock door suppliers, cladding manufacturers, structural designers and main contractors) to get every part of the detailing and workmanship up to the highest standards achievable. In some markets, airtight construction and good insulation can be sufficient to completely avoid the need for any heating in warehouse areas. In markets where the climate makes heating essential, this can generate very significant energy savings.
Juergen Diehl, Director, Regional Project Management Northern Europe
THE MERMAID AND Steve Haddock, Director Property Management, Prologis UK
While the main focus of the property management team is to advise customers on the most efficient way to operate their facilities, our responsibilities often extend beyond the buildings themselves into the entire development. We also realise the importance of integrating our sites into with surrounding local communities and at The Bridge in Dartford, we are exploring some innovative ways of creating new amenities for both our customers and our neighbours. The Bridge is a 264 acre mixed use site that contains 80 acres of public open space including two large lakes. This unusual amount of open space has given us plenty of scope to start some ambitious projects, the most advanced of which are a programme of triathlon events and a 12-piece sculpture trail.
Sustainable Sculpture Trail Meanwhile, local artist Will Jordan is creating a sculpture trail across the site. The Bridge has been designed as a sustainable development and Will is seeking to reflect this ethos in the artworks, which he is creating – as far as possible – from re-cycled and reclaimed materials. The most recent addition to the sculpture trail, The Running Man, marks The Bridge’s growing international reputation as triathlon venue, but the best known sculpture to date is the giant Mermaid, which stands over 9 metres high with a 14 metre wide tail on a specially created island in the middle of the North Lake. At the unveiling in 2011, my colleague Paul Weston who has overall responsibility at Prologis for the development of The Bridge said that the Mermaid would become an icon for Dartford. Judging by the number of visitors the sculpture attracts, his prediction is already coming true.
spaces property management
THE MIDNIGHT MAN Dartford: A New Centre for Triathlon Working with Dartford Borough Council and a local triathlon club, we launched the first standard distance triathlon at The Bridge in summer 2010. It took our Park Manager almost a year of meticulous planning to reach this stage but all her hard work proved to be worthwhile because we were able to offer almost perfect conditions for the event. With a clean freshwater swim and almost flat running and cycling courses, the triathlon attracted competitors from across the UK and internationally. By 2011, The Bridge Triathlon was an official qualifying event for the ITU World Championships in Beijing. Then in 2012, we launched the UK’s first overnight iron distance triathlon – the Midnight Man. This is a demanding race - a 3.86km (2.4 mile) swim followed by a 180.25km (112 mile) cycle and a 42km (26.219 mile) marathon run, all of which are to be completed in less than 17 hours. But since we are keen to make both triathlons and the individual disciplines accessible to people of all sporting abilities, we also host open water swimming races and running events. Plans to set up a junior triathlon club are also underway. ¶
EXCITING TIMES FOR NORTHERN EUROPE
Sander Breugelmans, Vice President, Transactions Officer Benelux
With improved fundamentals and a market which has moved beyond the inflection point, Sander Breugelmans is getting excited about industrial real estate in Northern Europe. How would you characterise the industrial real estate market in Northern Europe at the moment? I am very excited about the state of the industrial market in northern Europe and where we are in the real estate cycle. Market fundamentals have significantly improved since we hit the trough in 2009 and we have finally moved beyond the inflection point. Rental rates for logistics space have bottomed and have started to grow again. Even though prices for prime industrial real estate have started to increase, today’s values are still attractive compared to replacement costs. Yields for logistics are also appealing when we compare them to historic averages, other asset classes and risk-free rates. As a result, these favorable conditions provide the possibility for capital values to grow in the short to medium term.
What are the main growth drivers? In general, the European logistics property market is not as mature as, for example, the US. The proportion of the total industrial stock that can be qualified as Class-A space is around 4.5 times smaller, creating the opportunity to replace older obsolete buildings with new, stateof-the art distribution facilities. An important trend we currently see in northern Europe is that customers are consolidating their activities away from older smaller buildings into newer high quality stock that is often multi-modal and well-located in logistics hotspots. Their need for increasing operational efficiencies leads to a strong focus on Class-A real estate in strategic locations. Another growth driver is the increasing importance of e-commerce. The increase in on-line sales leads to additional warehouse demand, especially near the main population centres. The specific requirements of e-commerce customers, such as shorter delivery times and high return logistics, have an impact on both the location and buildings being sought.
How are you applying Prologis’ investment strategy? We want to acquire distribution centres that not only meet the needs of our customers today, but also those of tomorrow. This means that we invest only in global and regional markets. The properties we target are mostly near key seaports, airports and major freeway interchanges. These markets are often multi-modal in nature, boasting the presence of a barge and/or rail terminal, which is of increasing importance due to the need for sustainable operations. The property’s specifications, such as building layout, truck court depth, number of dock doors and clear height have to ensure that the building remains attractive to our customers in the future. In our key target markets we aim at building scale. Our objective is to build a portfolio in each submarket that is large enough to provide economies of scale and accommodate our customers in their plans for future growth. By leveraging the strength of our existing platform and strong customer relationships, we are confident we can provide a good value proposition. ¶
PROLOGIS 30 YEAR CELEBRATION PIER 1 HISTORY
The landmark building’s design has become a model for collaborative workspace, sustainable development and public access. Now the story of Pier 1 is presented for the first time online. A collaborative effort between the City of San Francisco and Prologis, the website has collected documentary video interviews and footage, historical images, architectural drawings, contemporary photographs and descriptive text to tell the story of Prologis’ transformation of a neglected warehouse and pier into a vibrant headquarters and public destination.
The renovation of the building, opened in 2001 and now listed on the United States’ National Register of Historic Places, was in part the result of a new type of public-private partnership with the Port of San Francisco. The project became a blueprint for the re-development of the nearby historic Ferry Building, Exploratorium museum and waterfront development in San Francisco and across the country.
Learn more about the Pier 1 story at prologispier1.com
If you have outgrown your current distribution facilities, Prologis can help. We have buildings in strategic locations across Europe in a size that will suit you. But if you have specific requirements, Prologis has the expertise and the resources to deliver bespoke facilities that will meet your growing property needs both now and in the future.
Prologis is a leading provider of distribution buildings with more than 52.3 million square metres of operating assets or under development in 21 countries on 4 continents.
Your local partner to global trade
Published on Oct 28, 2013