The service game

Small talk
Last year might have been a bonanza for the warehouse market, but there are still challenges to face, as Paweł Sapek, the senior vice-president and CE regional head and country manager of Prologis, tells us

A few weeks ago, in summarising the activities of Prologis for 2020, you said that one of the secrets of the firm’s success was “tailoring solutions to measure”. What’s the most fashionable cut for warehouses this season?

Paweł Sapek, the senior vice-president and CE regional head and country manager of Prologis: To extend the tailoring metaphor, one size never fits everyone and one cut will never be liked by all. That’s why tailoring to measure is an important part of our strategy. We are a long-term investor, so when we design our properties we do so from the perspective of many years into the future, and this can be seen both in the care we take to ensure a high-quality product and from our approach in treating warehousing as a service that goes far beyond just the building. As for the current fashions in the sector, I can say that our clients are the best trendsetters – it’s from them that we find out exactly what they need and then we realise their vision. The pandemic has made it necessary to restructure many areas of the economy and companies are rushing to roll out new sales channels, so the warehouse sector has to adapt to these changes.

Compared to the rest of Europe, how has the warehouse sector in the CEE region been coping during the pandemic? And what are the differences between the situation in Poland and other countries in the region, such as Slovakia?

Let’s start off by saying that on our continent, Central and Eastern Europe has shown the greatest resilience during the coronavirus crisis, especially during its early stages. In the Central European region, Prologis now has more 4.2 mln sqm of warehouse space and I only know of three cases where clients have had serious problems as a result of the pandemic. In Western Europe, the situation has been much worse. Each of the countries where we have properties – Poland, the Czech Republic, Hungary and Slovakia – has its own specifics, but each got through the outbreak of the pandemic, and despite the subsequent waves of Covid and the lockdowns, none have suffered any major disruption. The Czech and Slovak markets are heavily dependent on Germany and the automotive sector, which is still operating without any significant disruption, even though supply chains did have to be reorganised. Hungary is a small market that is mainly centred around Budapest, but that’s where we at Prologis recorded our best results last year. Poland is the largest market in the region, situated at the crossroads of several international trading routes – and its market is currently booming, both in terms of the number of projects launched and investment volumes.

With such a boom on the market, do warehouse developers still have to face any challenges, apart from chasing away unwanted investors with full wallets?

2021 is sure to be a record year in terms of acquisitions, but I’m far from being in a position where I can feel relaxed and carefree. For example, it’s difficult to foresee when the situation with the pandemic will finally stabilise and this has an effect on each area of the economy. I just hope it happens soon. In the Czech Republic, Slovakia and Hungary, logistics property owners are mainly long-term players who are unwilling to sell their assets – and that’s why investors are generally more interested in the Polish market. We are seeing more downward pressure on interest rates, which is resulting in property values rising, but Poland still has the lowest rents in Europe and I fear that if we don’t see a rise in rents, it will become less attractive for those looking to invest their capital.

You haven’t been neglecting the environment, despite the difficult times we are in, I’m mainly thinking about your contracts to purchase green energy…

As a leader in sustainable development, we want to continue to deepen our involvement in protecting the environment. Purchasing electricity with a guarantee of how it is sourced is a key part of our strategy. Limiting our carbon footprint is also important for our clients. That’s why we’ve teamed up with Tauron to ensure this for our tenants. As a result, Prologis is the first developer in the region to supply its clients with green energy. I’m convinced there will be more interesting measures like this for our clients this year.

And what plans does Prologis now have? New markets? Maybe new formats?

Our annual results confirm that we are following the right strategy, so we are not planning anything revolutionary. We’re still going to be active around Poland’s regional cities as well as in the Czech Republic, Slovakia and Hungary. Since the beginning of the year we’ve already started five new projects and another five are in preparation. We’re also looking at offers to buy warehousing complexes, but the boom has encouraged sellers to up their prices to a very high level. Also, we are going to continue to develop the projects we launched last year. We plan to introduce new elements to our Prologis Essentials Marketplace shopping platform.

To finish on a personal note, what do you miss most due to the pandemic? Are you trying to make up for this in any way?

Despite the lockdown restrictions, I’ve managed to get out onto the tennis courts quite regularly to spend time on my favourite hobby. And when they closed the ski-slopes, skiing – my other favourite pastime – was taken away from me. The pandemic has certainly forced us to be more creative, so my family and I have taken up ski-touring. Apart from that, I miss the regular contact I used to have with my friends and colleagues. I’m also waiting for the chance to eat out in a restaurant once again.

Interview: Tomasz Cudowski