The rent growth outlook has become more positive as markets have steadied and supply-side constraints have remained intact, driven by low levels of speculative development in most continental European countries. Land scarcity is also affecting rent growth.
Key takeaways regarding the European logistics market:
• Customer sentiment improved across Europe in the third quarter as market consensus on the near-term impact of COVID-19 became clearer, with businesses adjusting their operations according to prevailing conditions and preparing for second waves of infection rates.
• Demand for space is being driven by essential goods and e-commerce companies, with above-average demand from food and home goods suppliers.
• The average vacancy rate rose marginally over the period by 70 basis points, to 4.1%.
• Rents declined by -0.4% compared with the prior quarter.
In the third quarter, Prologis Europe:
• Launched its Prologis Essentials Marketplace, an online procurement platform that helps our customers quickly set up, integrate or upgrade their warehouse operations with sustainable and cost-saving technologies, products and services.
• Held its first online logistics event with guest speakers from Almazara Real Estate Advisory, CBRE Global Investors, Norges Bank Investment Management (the world’s largest sovereign wealth fund), Tesco Pension Investment and UPS Investments. The event drew an audience of more than 500 people.
• Appointed Sander Breugelmans as SVP, Region Head, Northern Europe. He will manage activities across the Benelux, Germany and the Nordics.
• In the Netherlands, Prologis unveiled its first-ever building constructed on ‘circularity’ principles. The 26,000 square meter warehouse has been created with recycled materials where possible and to BREEAM and WELL Building Standards.
Operating Performance Prologis Europe as of September 30, 2020:
Total portfolio: 19.0 million square meters.*
Period-end occupancy: 95.9% compared to 96.6% in Q2 2020, with the majority of markets reporting stability.
Total Q3 2020 leasing activity: 1,030,400 square meters:
• 321,000 square metres of new leases
• 709,000 square metres of lease renewals
Year-to-date 2020 leasing activity: 2.6 million square meters:
• 614,000 square meters of new leases
• 2.0 million square metres of lease renewals
*includes operating, development, held for sale, other and VAA/VAC
Prologis Europe: Capital Deployment, Q3 2020:
The third quarter saw six new BTS development starts across Europe, one each in Poland, the United Kingdom, Germany and France and two in Italy, for a combined total of 212,000 square meters.
Acquisitions & Dispositions:
• 279,000 square meters of acquisitions in Q3 2020, including six warehouses in Belgium, five in Spain and one each in the Netherlands and Italy.
• Five parcels of land were acquired totalling 233,000 square meters in Italy, Germany, the United Kingdom and Belgium
Prologis in Central Europe (Poland, Czech Republic, Slovakia and Hungary), ended the third quarter of 2020 with a total portfolio of 4.27 million square meters. Occupancy stood at a stable 94.1% (compared with 95.9% in the same period of 2019).
Operating & Investment Activity - Q3 2020
• 470,267 square meters of leases signed during the quarter.
• Throughout 2020 Prologis CE signed deals covering 1,271,072 square meters, which is equivalent to the total 2019 leasing activity.
• One development start totaling 11,079 square meters at Prologis Park Ruda-Śląska.