Prologis Provides Overview of 2011 Activity in Central & Eastern Europe

rologis, Inc., the leading global owner, operator and developer of industrial real estate, announced today a summary of the company’s 2011 results for the industrial space market in Central and Eastern Europe (CEE). During 2011, the company leased more than 1.7 million square metres of space in the region, with nearly 58 percent of that total in Poland. Prologis surpassed last year’s record in the region by more than 400,000 square metres.

Last year was significant for the company not only because of record-breaking leasing in the CEE but also because of a record-breaking combination of the two leading global industrial real estate organizations. The merger of ProLogis and AMB Property Corporation in June of 2011 was the largest such transaction in the industry in more than twenty years. The resulting new company, Prologis, Inc., is the leading global owner, operator and developer of industrial facilities, with a platform totalling more than 55.7 million square metres on four continents.

Prologis in Central and Eastern Europe

In 2011, Prologis captured a greater than 51 percent market share of industrial real estate leasing in the CEE region, including lease agreements shorter than 6 months and month-to-month contracts, based on data released in January 2012 by CB Richard Ellis. This represented a 25 percent increase over Prologis’ CEE leasing in 2010. More than half of the new leases were in Poland. New leases accounted for 385,000 square metres of space, and lease renewals accounted for more than 872,000 square metres, representing a customer retention rate of 84 percent. Short-term agreements — those for less than 12 months or on a month-to-month basis — totalled 454,000 square metres. Last year’s leasing activity reduced the vacancy rate in Prologis’ CEE platform to 11 percent, down from 16 percent in 2010. “Despite ongoing economic and financial concerns in Europe, our leasing results in the CEE were very strong, resulting in a significant decrease in vacancy across our operating platform and continued growth with our key customers,” said Ben Bannatyne, Prologis’ regional director for Central & Eastern Europe. “We had a clear focus on leasing space, while simultaneously executing build-to-suit projects within our existing land bank. By concluding short-term agreements, we adapted quickly to our customers’ changing needs while increasing our net operating income.”

Prologis in Poland

Prologis also broke its own records for leasing activity in Poland last year. In 2011, Prologis signed lease agreements for more than 992,000 square metres, representing a 13-percent increase in leased space compared to 2010. This activity gave Prologis a 48-percent market share in Poland in terms of the size of all transactions completed in 2011, including lease agreements shorter than 6 months and month-to-month contracts, based on the CB Richard Ellis January 2011 data, and reduced vacancy in the company’s Poland platform
to 13 percent, down from 19 percent. “The number of new distribution facilities delivered in recent years has decreased and as a result, the markets with limited available space and strong levels of demand have seen the stabilisation of rents, and some markets have even experienced rental growth,” said Bartosz Mierzwiak, Prologis’ market officer for Poland.

New investments for Prologis

In 2011, Prologis completed three new build-to-suit facilities totalling 66,000 square metres in Poland, the Czech Republic and Slovakia. For the year, Prologis monetized 16.5 hectares of land through developments, and 38.6 hectares through dispositions. In addition, in the fourth quarter of 2011, the company resumed construction of the third facility at Prologis Park Janki near Warsaw, totalling 18,780 square metres. The building is scheduled for delivery in the second quarter of 2012.

Plans for 2012

“For 2012, in Central & Eastern Europe, Prologis will continue to focus on leasing available warehouse space and renewing contracts with existing customers,” said Bannatyne. “The company has already begun the year with significant new leasing activity. With several sites prepared and ready for development in Prologis’ core markets, the company will be looking to secure pre-lease agreements to commence these projects. It will also continue to right-size its land bank across the region, disposing of land in markets that are not part of its strategic focus.” Prologis is the market leader for logistics and distribution facilities in Central and Eastern Europe, offering  more than 3.7 million square metres of space located in 42 distribution parks. Prologis is also a leading provider of warehouse space in Poland, with a portfolio of more than 2.1 million square metres of space in 108 buildings throughout 26 distribution parks.