Prologis firing on all cylinders

At the same time the developer is planning to reduce the vacancy rate in its facilities to below 5 pct. In 2015 the company’s Polish portfolio was occupied in 92.9 pct, slightly less than the company’s average for CEE, which amounted to 95.4 pct. “Polish warehouse market will grow dynamically this year, and we want to grow together with it preserving our 25-pct share in the market,” said Paweł Sapek, country manager at Prologis Poland. According to the company’s 2015 financial report, Prologis leased 837,700 sqm of warehouse space in Poland last year. In the Central and Eastern European countries in which Prologis is operating, the company leased a total of 1.75 mln sqm of space, which was close to the record set in 2014. The 2015 result was comprised of 618,000 sqm of new leases and 860,000 sqm of renewals, while the remaining leases were generated by short-term agreements. During the year Prologis developed nine buildings with a total of 197,000 sqm of space and started the development of app. 200,000 sqm of new space. One of the most important decisions taken by Prologis last year was to exit the Romanian market by selling its assets to CTP. Yet, the company also acquired six CEE warehouse buildings with the combined space of 97,000 sqm. Will there be any acquisitions in Poland this year? “At the moment there are no suitable products on the market for us. We are looking around but I am not sure if this is the right time for acquisitions,” says Paweł Sapek. As he also stresses, Prologis is going to focus on the new developments this year. Therefore, a potential sale of some of the Prologis assets is also an option considered the company at the moment. Prologis’ customer retention levels stand at 81 pct in Poland and 87 pct in the entire Central and Eastern Europe region. “We expect that 2016 demand will be stable and this will result in further firm development of the industrial real estate market in the whole region. The investment level should also remain constant, with our speculative facilities being at least 30 pct pre-leased before the construction starts. E-commerce, which is our fastest growing group of tenants right now, combined with further expansion of the retail and automotive sectors, will be driving demand this year,” said Martin Polak, senior vice president and regional head for Prologis CEE.

Positive forecast for Hungary

Prologis keeps the high pace of growth not solely Poland. The warehouse developer has recently begun the development of an 8,000 sqm BTS facility (DC2) at Prologis Park Hegyeshalom for logistics provider Fiege. The warehouse will also include 100 sqm of office space. In addition, Fiege has signed a lease renewal for its existing 11,400 sqm facility in DC1 within the same park. “Hegyeshalom, our only development in Hungary outside the greater Budapest area, has been fully occupied in past years and is becoming an important strategic hub for Fiege’s regional logistics activity with its reach to Austria, Hungary and Slovakia,” commented László Kemenes, senior vice-president and country manager at Prologis Hungary. Located in western Hungary, Prologis Park Hegyeshalom currently comprises a 24,100 sqm facility that is fully leased to Fiege and SMR. It offers 120,000 sqm of additional development potential.

This is just one of a number of Prologis leases on the Hungarian market. The company has recently announced signing another six deals for a total of almost 100,000 sqm. These include a 27,800 sqm renewal with the supply chain operator Geodis in Prologis Park Budapest-Budaörs, a 24,800 sqm renewal with Schneider Electric in Prologis Park Budapest-Sziget, a new 16,000 sqm lease in Prologis Park Budapest M1, a 12,300 sqm renewal at Prologis Park Budapest-Harbor, a 10,700 sqm renewal with LGI Logistics Group International at Prologis Park Budapest M1, and a 6,000 sqm expansion at Prologis Park Budapest-Batta. “As leasing activity gradually increases on the Hungarian market, these transactions demonstrate that there is strong demand for our high-quality buildings and services not only from our existing customers but also from new customers. We are firing on all cylinders,” commented László Kemenes, senior vice-president and country manager for Prologis Hungary. Currently Prologis has over 600,000 sqm of space in six Hungarian parks. With all new developments and value-add acquisitions, the company’s CEE portfolio stood at 4.33 mln sqm as of the end of 2015.