Europe Builds Out

In the second half of 2013, pent-up demand from European customers showed itself in at least four countries.

Prologis UK

Prologis Park Ryton

At Prologis Park Ryton in the West Midlands, Prologis signed two build-to-suits with repeat customers who held leases in other countries. The first, a 165,200 square foot (15,300 square meter) facility for Hi Logistics, a subsidiary of LG Electronics, was started in September and is expected to be completed in the first part of 2014. The second is a 170,500 square foot (15,800 square meter) facility for the Freeman Company, an event marketing service provider, begun in October and expected to complete in the summer of 2014.

“Prologis has a strong relationship with Freeman in North America, and we are delighted to be extending our relationship with them to the UK,” said Andrew Griffiths, Prologis’ regional director for the UK. “We have invested in our prime sites in order to offer our customers the best opportunities in the UK market and are pleased to meet Freeman’s requirements at Ryton.”

Prologis UK went on to sign three more BTS deals before year end:

  • 172,600 square feet (16,000 square meters) for Brake Brothers Standard Life Investment at Prologis M8 in Scotland, started in October and finishing at the end of 2014
  • 1 million square feet (93,000 square meters) for Sainsbury’s, the grocery retailer and longtime Prologis customer, at Prologis’ rail-connected facility at Daventry known as DIRFT II, started in September and also expecting completion at the end of 2014
  • 131,400 square feet (12,200 square meters) for Crosswater Holdings at the Bridge in Dartford, started in November and expected to be completed in the summer of 2014

“We understood some years ago that rail would become increasingly important to the logistics sector and we have invested in strategic rail-connected sites,” Andrew continued. “We were therefore able to understand Sainsbury’s requirements and to provide a facility that meets the company’s operational and CSR needs. As Sainsbury’s decision demonstrates, the move towards rail freight is now gathering momentum.”

Prologis France

In September L'Oreal, the French cosmetics group and Prologis’ repeat customer, entered a build-to-suit agreement to develop 270,000 square feet (25,000 square meters) at Prologis Park Vemars. This will be the sixth facility at the park, which offers direct access to Roissy-Charles de Gaulle Airport. The building is being designed to receive BREEAM "very good" certification. L’Oreal is expected to take occupancy in the summer of 2014.

Prologis Park Vemars

"L'Oreal already occupies Prologis facilities in Poland and the Czech Republic,” said Philip Dunne, president of Prologis Europe. “But we continue to see a scarcity of available Class-A space driving build-to-suit solutions across Europe, so we are delighted to strengthen our established relationship with L'Oreal. This transaction further highlights the strategic value of our land bank as well as our ability to meet specific logistics requirements."

In November 2013, an international retailer signed an agreement to develop a 345,000 square foot (32,000 square meter) build-to-suit facility at Prologis Meaux Business Park in the Paris market. The development can be expanded to more than 538,200 square feet (50,000 square meters) and offers direct access to Roissy-Charles de Gaulle Airport. The building is expected to be completed near the end of 2014.

“We’ve worked hard to take advantage of the opportunities that have arisen in France by consistently leveraging our strategic land positions and bringing innovative solutions to our potential customers,” said François Rispe, Prologis’ regional director for Southern Europe. “The deal with L’Oreal at Prologis Park Vemars is an excellent example of this. The team was able to meet the customer’s ever-changing needs, develop confidence in our ability to secure planning, and propose innovative initiatives on energy-efficient programs.

“The biggest opportunities in France today lie within e-commerce and retail,” François continued. “Those two industries are either growing or consolidating their businesses, and we foresee most of the opportunities arising in the French logistics corridor.” Prologis believes that the Paris region – a metropolitan area with 12 million people – could see large development requirements for buildings between 500,000 square feet (50,000 square meters) to 1 million square feet (100,000 square meters).

Prologis CEE

Groundbreaking at Prologis Park Prague D1 West

The two French deals were paralleled by two build-to-suits in Central and Eastern Europe. In October, Prologis broke ground on Building 5 at Prologis Park Prague D1 West in the Czech Republic. This 237,000 square foot (22,000 square meter) facility was originally conceived as a speculative development, based on the lack of modern Class-A space and 97 percent occupancy in this popular logistics location. But as soon as DHL Supply Chain, a longtime Prologis customer, was informed of the oncoming availability, the customer began negotiating, and within weeks the development became “spec-to-suit” for DHL.

“This building is our first speculative development in the Czech Republic since 2008, which some felt was a bold move,” commented Ben Bannatyne, Prologis’ regional head of Central and Eastern Europe. “But given our unrivaled knowledge, expertise and market-leading research, we were confident it was the right one. There’s no doubt in my mind that our strong relationship with DHL helped the discussions proceed smoothly, and because they have been a customer at Prologis Park Prague D1 West for the past 11 years, they fully appreciate the strategic value of the location.”

Another new, 150,000 square foot (13,900 square meter) facility is being constructed for a major provider of sensor-based technologies, located at Prologis Park Bratislava. The facility will have direct access to Slovakia's capital, the international airport, as well as major motorways. Announced in November, completion of the facility is expected near the end of 2014.

"All of these transactions demonstrate the continued strengthening of demand for high-quality facilities in key European markets," said Gary Anderson, Prologis’ CEO for Europe and Asia. "Our best-in-class portfolio and land bank provide our customers with access to these strategic trade centers while meeting their specific logistics needs."

Find more information about Prologis’ European platform here.

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