MAGAZINE: Pörschke’s P3 in pole position

Frank Pörschke speaks exclusively to PropertyEU about the industrial sector’s moment in the sun, in his first media interview since taking over as CEO of P3.

Frank Pörschke, the new CEO of P3 Logistic Parks, thinks that the logistics property business has finally become cool. After years of being the ugly duckling of real estate, its stellar investment fundamentals and new tech specs are raising its profile all round.

‘When I entered the real estate industry years ago, property wasn’t seen as a particularly glamorous career path,’ Pörschke says. ‘But real estate’s image in general has changed – it’s now regarded as a dynamic and interesting industry to work in. Although the industrial asset class has been lagging behind in this area, we want to transform that impression. For me it’s part of my ambitions for P3 – we want to be the European leader and do what it takes to attract excellence.’

Pörschke is giving his first major interview since taking over at the helm of P3 on 1 April and his enthusiasm is palpable. ‘What I really like about P3 is this very entrepreneurial spirit which is combined with a very institutional approach. To grow that still further, I’m looking for the best talents, including specialists in different fields and professionals for whom logistics was perhaps not the first sector to come to mind.’

Stellar fundamentals 
Industrial property is far from being real estate’s Cinderella sector today. After its appeal soared still further during the pandemic while other asset classes faltered, its most successful investors have capitalised on its stellar fundamentals, underpinned by the e-commerce trend and interrupted supply chains requiring more storage space.

But P3, which was founded back in 2001, has been riding the slowly building wave for two decades. Owned over the years by Bahrain-based Arcapita and the likes of TPG Real Estate and Ivanhoé Cambridge, its shareholder changed again in 2016 when Singapore-based sovereign wealth fund GIC acquired the business for €2.4 bn.

The firm went on to expand its European horizons with a number of choice deals, and in the 12 months preceding Pörschke’s appointment, closed north of €2 bn in acquisitions to increase the gross lettable area (GLA) of its portfolio by 48% to more than 6.5 million m².

Does Pörschke think P3 can keep achieving these kinds of growth metrics this year? ‘Last year’s GLA growth was driven largely by two major portfolio acquisitions,’ he notes. ‘We are now in 12 countries, but yes, we see that the opportunities grow as our footprint grows.’

Despite that, Pörschke feels that caution is important as the firm increasingly finds itself competing against cyclical investors who have taken a shine to the sector. ‘We are still actively making deals but we can see that the market has heated up significantly,’ he says. ‘We often say that a deal is simply not worth it for us – It’s a question of experience. We are definitely doing more acquisitions driven by local contacts, including single-asset and portfolio deals in the €20-200 mln space on a regular basis. We’re also speeding up our development activity – we have around 480,000 m2 under development at the moment.’

All this dynamism supports the idea that the logistics business is really enjoying a golden age. ‘E-commerce won’t take over 100% of retail. But there is still a lot of potential on the e-commerce side. Look at the UK – it has some of the highest e-commerce penetration figures in Europe and yet is still developing further. But that’s not all – we are seeing strong demand from other sectors, even traditional retail players, that are combining physical stores with e-commerce and optimising their logistics portfolios to better supply stores. There’s lots of 3PL growth. The pandemic exposed vulnerabilities in supply chains, which is encouraging clients to build in more buffer.’

In terms of specifying territorial growth, Pörschke says that it makes sense that Germany is still the firm’s ‘biggest market, because it’s the biggest economy in Europe’. The P3 portfolio currently comprises 35% German assets, with 25% in Western and Southern Europe, and 40% in Central and Eastern Europe. ‘I do see huge potential in the Netherlands, France, Italy and Spain,’ he adds, ‘and our historically strong position in CEE – particularly in Poland and the Czech Republic – will help us grow further there as well.’

The future of logistics
Yet Pörschke recognises that logistics’ soaring popularity is also its Achilles heel. ‘The availability of land is becoming a significant issue in some countries,’ he says. ‘Local municipalities are becoming less happy to grant further development permits and restricting greenfield construction, particularly in Germany, the Netherlands and the Czech Republic. Construction prices have increased significantly, which may or may not be an issue if you can pass on costs. Then of course, the competition to buy yielding assets adds another layer of pressure.

‘Brand new assets in the best locations are being chased by everyone, and particularly by newcomers who prefer a new asset with a new lease. We are slightly more flexible, not on location, but more flexible on the age of the building or lease durations. We are convinced we can judge if and when we can manage assets to core.’

Meanwhile, the industry is under the microscope for its approach to sustainability. ‘We will only develop an asset if we can reach BREEAM Very Good or better, and are slowly getting the whole portfolio certified,’ he says. ‘Right now, we’re focusing on tackling tangible things. So, insulation, photovoltaics, charging stations, developing green areas on plots and many more aspects like that. We’re not going to achieve all this overnight, but we’re not developing to sell immediately, so we’ve got time on our side.’

Above all, Pörschke is not afraid of the sector’s myriad challenges and believes that pursuing excellence in areas such as sustainability will all pay off in the end. ‘It’s about servicing clients, fulfilling our own requirements on processes, and of course, attracting the next generation of talent. And that’s what counts,’ he concludes.


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