Prologis, the global leader in logistics real estate, turned in a strong second quarter in Europe with occupancy levels rising to 95.6%, an increase of 130 basis points year-on-year.
‘Customer sentiment remains positive in continental Europe despite Brexit,’ said Ben Bannatyne, president Prologis Europe. ‘Occupancy across our European portfolio remains the highest on record. Demand is strong in Germany and the Netherlands and continues to improve in Southern Europe. In the UK customers are not overreacting to Brexit.’
Investors may be scared off now by London office developments, but logistics is the sector least likely to be affected by any Brexit fallout, Bannatyne commented during an interview with PropertyEU. Slightly lower GDP growth in the UK could lead to a modest slowdown in capital markets and the availability of capital for speculative development, but that would lead to further tightening of supply, providing a further boost to sustained rental growth, he noted.
‘There may be a shift in capital markets from the UK to safe havens on the Continent like Germany and the Netherlands. But the net effect would be neutral for us,’ he said. ‘I don’t think we will see any negative effects and I’m not sure whether there would be any positive effects. Overall it’s business as usual.’
Commenting on the company’s global Q2 earnings, Hamid Moghadam, chairman and CEO, noted that vacancy rates were at an all-time low across the business thanks to strong demand in both the US and Europe. ‘In spite of Brexit, our key business drivers remain intact, and we do not anticipate a material operational impact. Consumers continue to migrate toward e-commerce, and companies still need to adapt their supply chain strategies, driving demand for high-quality, well-located logistics facilities.’
Prologis reported on Tuesday that net earnings per share rose to $0.52 in Q2 compared with $0.27 for the same period in 2015. Core funds from operations per diluted share was $0.60 compared with $0.52 for the same period in 2015.
Prologis Europe signed new leasing agreements totalling 485,530 m2 during the second quarter, which was 36% higher than in the same period in 2015. The biggest lease signed during the period was a 43,600 m2 for Jaguar Land Rover at Prologis Park Ryton in the UK. In mainland Europe, it signed a 20,500 m2 warehouse for Mall.cz, an e-commerce distributor at Prologis Park Prague-Jirny in the Czech Republic. In Poland Prologis signed a 22,300 m2 leasing deal with arvato, a third-party logistics provider at its park in Stryków.
At quarter-end, the company owned or had investments in, on a wholly-owned basis or through co-investment ventures, properties and development projects of 16.6 million m2 in Europe. Assets under management in Europe totalled €13.4 bn at end-2015.