Events

Check back later for upcoming events!

Employs 1,985 professionals.

45 offices; a presence in 24 countries.

5,000 customer relationships.

$54 billion in total assets.

$71 billion assets under management.

All the World's A Warehouse

All those flat-screen TV monitors that flew off the shelves during the recent holiday season took a long journey.  To bring these electronic goodies, as well as appliances, industrial equipment, clothing and furniture to consumers and businesses requires a complicated logistical dance. Often, the chain stretches from factories in the interior of China to warehouses in Shanghai to container ships, to trucks and then to staging facilities in places such as Riverside, Calif., or Bratislava, Slovakia, from which the goods are then transferred again to retail outlets.

The complexity of these global supply chains has spelled opportunity for real estate investors, who have followed demand for industrial space around the world.  To accommodate the movement of goods, increasingly from Asia, developers in Europe and United States have added a lot of distribution capacity to meet demand.

However, the opportunities are shifting. Developers in the U.S. have been adding space at a rapid pace. Completions in the sector increased by almost 15% in 2006, according to  Sam Chandan, chief economist at REIS, a market researcher. Fortunately, demand for warehouse space remained relatively robust, says Ross Moore, senior vice president of market and economic research for Colliers International Property Consultants. But in 2007, it looks like developers may race ahead of demand. “We will build 205 million square feet of space,” he says. “At the same time, nationally we will absorb 180 million to 190 million square feet of space.”



Investors in industrial properties may find better prospects in Europe, where economic growth is improving and there is need for new distribution networks to deliver goods throughout the growing European Union. In addition, there is a need for more up-to-date logistics facilities across the continent.

There are two ways to look at Europe in terms of industrial development: at the ports and at places that handle interior distribution. Two of the world’s largest owners of industrial properties, San Francisco-based AMB Property Corp. and ProLogis in Denver both like Europe’s industrial market potential, but each has taken a different tack.



AMB prefers the port approach and has been very active in the traditional northern ports of Rotterdam, Netherlands, and Hamburg, Germany.

“We recently acquired a half million square feet of space in Hamburg,” says Kim Snyder, a senior vice president and managing director with AMB. “Overall in Hamburg, we have 1.4 million square feet and we are about to acquire another half million. That would make us the largest landlord of industrial space in the city.”

Snyder says his company is also very active in Rotterdam-Amsterdam. “We have close to 3 million square feet in this market cluster. It is a very productive area for us and we continue to acquire as well as build facilities.”

Further to the south, in Belgium, sits another busy cluster, the seaports of Ostend, Zeebrugge, Ghent and Antwerp, which form one large trading area that is home to 400 distribution centers including those operated by Nike, Sara Lee, Pioneer, Samsung and Black & Decker. According to a summer 2006 Cushman & Wakefield report, it costs €43 per square meter annually to rent space in Ghent making it about the cheapest distribution market in Europe. London, the most expensive, stands at €200 per square meter annually.

Not all port activity is concentrated in northern Europe. In Slovenia, the up-and-coming small port of Koper has experienced terrific growth and could eventually become another gateway for shipping into Russia. Koper still has a long way to go. Although container traffic double from 2001 to 2006 to 200,000 TEU (20-foot equivalent unit), in Antwerp, for example, container handling capacity has also doubled to 12 million TEU.

Central Europe, however, is the next great market for distribution, and this would include all the countries created from the old Soviet Bloc, from places like Slovenia and Serbia in the south through to Estonia and Latvia in the north.

“This is all about catch-up,” exclaims Michael de Jong-Douglas, ProLogis’ senior vice president for Central and Eastern Europe in Warsaw, Poland. “If you look at the number of square meters of warehouse and distribution per capita, the markets are underserved compared to Western Europe.”

ProLogis has been very active in Central Europe, but solely in Poland, Hungary, Czech Republic and Slovakia. Last year, ProLogis began development of its first facility in Romania, acquiring 69 acres of land outside Bucharest.

In Poland, ProLogis is the largest provider of industrial space with 8.5 million square feet: three parks in Warsaw and two more under construction; two parks in the western part of the country and another being completed; plus five more parks either completed or under construction elsewhere around the country.

 ProLogis Park Chorzow, in the southern Polish city of Chorzow, will create 1.6 million square feet of space when complete. In mid-2006, ProLogis signed leases of 309,000 square feet with Raben Group, a European third-party logistics provider; 188,000 square feet with FM Logistic, a French-based logistics provider; 144,000 square feet with Reporter, a Polish clothing company; and 133,000 square feet to Tesco, a UK retailer.

Indeed, ProLogis’s European business has become so significant that last September it floated a €2.7 billion public offering on the TK Exchange for ProLogis European Properties.

ProLogis and AMB often build where its clients want to be. Tesco’s expansion plans in eastern Europe, where it operates hypermarkets and convenience stores, helped drive development of  ProLogis Park Teresin (outside Warsaw). The retailer acquired a building in the 1.7 million-sq.-ft. project and is also leasing space from ProLogis in the Czech Republic and United Kingdom.