Expanding into new areas

Rafał Ostrowski, ‘Eurobuild Central & Eastern Europe’: You have been the head of P3 in Poland for several months now. What’s the management plan you have adopted – continuity or changes?

Bartłomiej Hofman, managing director for Poland, P3 Logistic Parks: I’ve been aware of P3’s impressive growth over recent years and now that I’ve taken the helm in Poland my priority is not just to maintain the company’s current level of activity, but also to strive for real growth – both in terms of leasing and new development at existing parks as well as expansion into new areas.

In the booming market we have today, a lot of companies are keen to talk about their future prospects. How does P3 intend to distinguish itself from its competitors in order to secure its market share?

We always try to respond to the individual needs and expectations of our clients, so that the warehouses we develop for them are designed to help their businesses not just now, but also in the future. We already offer our tenants modern solutions, which are still rare on the market today, but we are convinced that over time they will become the standard to follow. For example, P3’s buildings meet and sometimes exceed the most stringent European environmental impact criteria. In addition to that, P3 has a large land bank in Poland, on which we can build up to 700,000 sqm of modern warehouse space for clients. Some of the land already has building permits, so we can start the implementation of projects very quickly.

At the moment there is a lot of talk about “city logistics” – distribution centres built in cities to handle e-commerce. This is not an easy market to operate in – the land is expensive and not easily obtainable. What is your approach for competing in this area?

For some time now, we’ve been seeing growing interest from clients for projects that enable them to handle last mile logistics. We have carefully analysed their expectations when it comes to such facilities. We’ve also carried out a study to determine which cities would be best served by small urban hubs. As a result, the P3 Urban Logistics concept has been developed and we are now looking for attractive sites, well connected with city centres. We see our opportunities in this market segment as a combination of good relations with our current clients who want to expand their e-commerce business, or partnering with new ones who already operate in this segment, enabling them to benefit from our knowledge, experience and competence in developing large logistics facilities.

On which markets will P3 be focusing?

In line with our strategy, we are looking at locations with inter-regional potential, such as Poznań, Warsaw and Piotrków. We have our sights set on plots in core locations, which would allow us to develop and build large logistics parks. Silesia is one region that has great potential. Another attractive location for us is central Poland, where we already have P3 Piotrków park near Piotrków Trybunalski; and we’re now looking more closely at the Łódź area. Of course, as well as having new projects in new locations, we will also continue to develop our four existing parks.

Is growth to be achieved purely through construction or also through acquisitions? And if you are planning any acquisitions, then what kind of properties will you be looking for?

Last year, the Polish investment market broke new records, with the transaction volume exceeding EUR 1 bln. Today there are many players who want to build up their property portfolios, so the price of good quality warehouses has grown significantly. Considering the fact that we are a developer and that construction is part of our DNA, we feel that the construction of new facilities will enable us to expand faster than purchasing existing warehouse portfolios and competing for them with the core funds. While we haven’t ruled out acquistions if the right sites arise, our primary business will always be organic growth via the construction and ownership of large logistics parks.

And what about raising funds for development? Is the sale of finished product also planned?

P3 has long term and stable financial support from its owner and is a long term investor in the properties it develops. Our strategy is based on the acquisition of large investment sites, their development through the construction of warehouses and their retention in our portfolio. However, we always consider all the possibilities and decide on the course of action that would allow us to grow in the best possible way. If, for example, we feel that the sale of selected existing assets would provide us with funds that could be used for the purchase of new investment sites, giving us the opportunity for even more dynamic growth, we may do so.

The economy obviously has its cyclesand so the current boom in the warehousing sector won’t last forever. Have you taken any precautions in case a downturn occurs? If so, what are they?

Regardless of the prevailing economic conditions, we always ensure that we lease our buildings to stable companies. With such partners it’s easier to get through any market turbulence. Moreover, given the experience of developers in the previous business cycle, we only undertake speculative building in selected locations where there is demonstrable unsatisfied demand to ensure that vacancy levels will be limited. In such cases, when the space is started speculatively, it is often leased out before it is completed.

In 2017, P3 joined the United Nations Global Compact, a global environmental initiative. What has been the impact of this on your operations in our domestic market?

We have always striven to deliver the highest standard of warehouses. P3 is already one of the companies with the highest environemental awarness in the European logistics real estate sector. That’s why we decided at the end of last year to join the United Nations Global Compact, the world’s largest initiative bringing together businesses working towards sustainable development. This initiative calls on companies to align their strategies and practices with universal principles regarding human rights, labour, the environment and combating corruption. We are also a member of GRESB, the global programme for environmental protection, social responsibility and corporate governance (ESG) for real estate companies. GRESB assesses sustainable development activities in the real estate sector and helps companies implement sustainability practices. ν