Operating Performance

Prologis Europe ended the first quarter with 95 percent occupancy. The company signed new leasing agreements totalling nearly 260,500 square metres in the first quarter.

At quarter-end, the company’s operating portfolio was 15.4 million square metres. Adding developments and value-add acquisitions, the portfolio was 16.4 million square metres.

“Customer sentiment is becoming more even across Europe,” said Ben Bannatyne, president, Prologis Europe. “It remains strong in the U.K. and Northern Europe, and is improving in Central, Eastern and Southern Europe. Occupancy across our European portfolio remains the highest on record.”

Markets with the strongest customer demand in the first quarter were:

 the U.K., Hamburg, Munich, South Netherlands, Rotterdam and Sweden in Northern Europe;

 Lyon, Le Havre and Barcelona in Southern Europe; and

 Prague, Budapest and Bratislava in Central and Eastern Europe.

Notable new leasing activity in the first quarter included:

 35,000 square metres for XPO, a third-party logistics provider, near Amsterdam, the Netherlands

 18,000 square metres for Linemart, a third-party logistics provider in Prague, Czech Republic

 7,100 square metres for an express shipping service company in Chorzow, Poland

Development Starts

Supply of Class-A distribution facilities remains low across all European markets. In the first quarter, Prologis Europe started four developments in the Netherlands, the U.K. and the Czech Republic. Totalling 59,030 square metres, 71 percent of the development space was build-to-suit and 29 percent was speculative.

Development starts included:

 36,600 square metres for Coolblue, an e-commerce company, in Tilburg, the Netherlands

 10,500 and 7,300 square metre facilities developed speculatively in West London, U.K.

 5,200 square metres for Nagel Cesko, a food logistics provider, and 5,100 square metres for Logflex CZ, a third-party logistics provider, in Prague, Czech Republic.

“We continue to selectively develop in tighter markets with solid operating fundamentals, as a result of low vacancy levels, available equity and positive customer sentiment,” Bannatyne said.

Acquisitions and Disposals

In the first quarter Prologis Europe acquired €30 million of buildings, totalling 52,600 square metres, and five land plots, totalling 414,390 square metres, across Europe. These acquisitions were in line with Prologis’ strategy of investing carefully in global markets.

Acquisitions included:

 two buildings from Borgosesia Gestioni SGR in Fiano Romano, near Rome

During the quarter, Prologis Europe sold properties in Spain, the U.K. and the Netherlands for a total of €214 million.

Disposals included:

 a 144,300 square metre portfolio of Spanish industrial properties to GreenOak Real Estate’s Continental European Private Equity Real Estate Fund

“Logistics real estate continues to attract investors and capital for development continues to be strong,” Bannatyne concluded. “Cap rates remained stable over the first quarter, with the potential to compress further this year.”