Segro goes for growth

Tomasz Cudowski, ‘Eurobuild Central& Eastern Europe’: Segro was particularly busy in H1 2017 and things were especially hot on building sites. What was your mood like at the end of this period?

Magdalena Szulc, Segro business unit director, Central Europe: Indeed, the first half of the year was particularly busy for us but it was also successful – in Poland and the Czech Republic. At the end of June we had many development projects under construction – almost 75,000 sqm in Central Europe, close to a 6 pct increase in terms of our entire portfolio.

Which new projects deserve a particular mention and why?

I will focus on one, mostly because of its scale. A new distribution centre is being developed for Arvato Polska in Segro Logistics Park Stryków, which will supply the e-commerce channel of LPP brands Reserved, Mohito, House and Sinsay.The office section will comprise as much as 1,000 sqm out of the 30,400 sqm being developed. The completion of the construction process will take place in the autumn. The building is being developed near a toll station and will be perfectly visible from the A2 motorway.

How do you view the state of the development market in Poland? Should the ‘Big Five’, which Segro is a member of, be afraid of some of the smaller-but-active players?

The warehouse market has continued its gradual growth of the last few years and has never done better. At the end of June the total stock of the Polish market amounted to app. 12 mln sqm, which gives us eighth position in the entire European Union. Our company has been growing strongly together with the market and has also strengthened its position among the top three owners of modern warehouse space. When it comes to the ideal format for companies operating in the sector, I believe that there will be enough space on the market for smaller as well as larger players because we are still riding the crest of a wave.

Which segments are set to stimulatethe warehouse and industrial market growth in Poland – the current leaders or perhaps new players?

The characteristic features of the Polish market include the growing proportion of companies involved in light production, particularly in the south of Poland as well as in Poznań and central Poland. Many productioncompanies are moving their operations from other markets to our country. Home and office door manufacturer Centor is one example. The company moved its production from Solihull in the UK to a Segro facility in Poland and is now planning to triple its production output over the next three years.

The automotive sector has also been expanding its share of your portfolio. Is this a coincidence or a continuing trend?

Definitely the latter. Apart from our flagship project for Volkswagen Group Polska in Komorniki near Poznań, which has an area of 30,400 sqm, we have been acquiring new customers from this industry in Upper Silesia, in particular. These include Eco-Technilin, which has recently become our customer in Tychy, where it occupies more than 5,200 sqm. We have carried out bespoke projects for two clients from this sector over the last twelve months in Upper Silesia, a combined area of 24,000 sqm.

You have also been securing more and more tenants from the e-commerce sector. Even though this market is still in its infancy in Poland and the Czech Republic compared to Western Europe...

... that’s why its dynamic growth has recently been one of the main driving forces of the warehouse market. E-commerce will certainly continue to develop rapidly and customers will continue to look for new facilities – large ones will be of interest to the key players of the e-commerce market, while small-business-units will be suitable for the smaller companies involved in online trading. Segro is planning to add more e-commerce customers to its portfolio and contract have been signed with Arvato Polska (30,400 sqm) in Stryków.

Which markets are particularly attractive to you? I mean, in terms of the size of the cities and the specific regions.

According to the company’s stra- tegy, our parks are exclusively located in particularly attractive regions, convenient for our customers in the long-term. When choosing the locations of our new projects, we always make sure there are motorways, expressways, transport hubs and the largest conurbations nearby, since they guarantee an excellent local market as well as a supply of human resources. We are mostly developing in central Poland at this time, which will always be very attractive for tenants due to the junction of the A1 and A2 motorways, which provides effective logistics to any part of Poland and abroad. We still have development potential in all nine locations where we own parks in Poland.

It’s no secret that labour supply issues are the Achilles’ heel of the customers in your sector. Do such problems also affect Segro as a developer and owner?

This problem does not concern us directly. We have an enthusiastic and well integrated team. However, problems with human resources indeed affect all sectors – in particular blue collar enterprises that often don’t require highly qualified personnel. The increasing presence of e-commerce customers has had a significant impact on that. Servicing the same amount of warehouse space for the traditional storage of goods requires eight times fewer resources compared to servicing it for e-commerce! We have also noted that building an employer’s brand is becoming more and more important to our customers, so we actively support them in these activities by offering specific services such as joint communication. We also help our clients in their communication with the market by offering additional marketing support.

Does this HR support stem from the fact that Segro is also the manager of its warehouse space?

To a large extent it does. Starting from the basic building itself: all new facilities are BREEAM-certified, so the architectural design includes staff-friendly features such as superior access to daylight – which improves the working conditions considerably, – as well as bicycle shelters and privileged parking spaces for car-sharing vehicles. These are small details that could turn out to be crucial factors when it comes to keeping the best personnel into the long term. And when a building is in use, we can also introduce significant innovations to increase the personnel’s security and streamline their work. These include replacing outdoor lighting for LEDs, which we have recently carried out in each of our parks in Poland.

Segro not only looks after its customers’ staff but also the entire natural environment. What does all of this involve?

We offer a whole package of initiatives and activities. We have taken the decision that each new building will be certified under one of the strictest and most respected systems – BREEAM. Now we can already boast several buildings that have been awarded this certificate. A new section of one of the buildings in Segro Logistics Park Warsaw, Nadarzyn, which has an area of nearly 15,000 sqm, was awarded a BREEAM certificate with a ‘Very Good’ rating and a score of 63.9 pct. This is the best figure for any warehouse in Poland, which confirms the high quality and efficacy of the green solutions implemented by us. Another of our buildings, Tesco Distribution Centre in Segro Logistics Park Poznań, Komorniki, was certified with a similar score prior to this and was also awarded a BREEAM ‘Very Good’ certificate. A building in Upper Silesia has also recently been certified.

What’s Segro planning for this year – new projects, new formats, or perhaps regional expansion?

One of the main elements of Segro’s strategy is to continue to strengthen the company’s position in the best locations where it is already present. Our logistics parks are currently located in all the regions considered of key importance to Segro and we want to build on these locations first. We have been gradually expanding our land bank in these regions as we believe that these are ideal for our customers, providing them with the most suitable conditions for business development today and in ten years’ time. In 2016 we bought an 11 ha plot in Gołuski near Poznań for a new project where we could build up to 51,000 sqm of warehouse space suitable for logistics or light production.