The level of occupancy within Prologis Europe’s 13.7-million-square-metre (147-million-square-foot) portfolio increased to 93.6 per cent in Q4 2013, an increase of 60 basis points during 2013.
Demand continues to be driven by the reconfiguration of the supply chain, trade and e-commerce.
Prologis Europe leased 994,700 square metres in the fourth quarter and three million square metres in 2013.
Rents on new leases and renewals signed in Europe during the fourth quarter increased by 1.4 per cent, driven by strong performance in the UK, the Czech Republic and Sweden. In 2013, net effective rental growth was 4.1 per cent.
The strongest markets in the fourth quarter in terms of demand were Gothenburg, Munich, Cologne, Dusseldorf and south Netherlands in northern Europe; Lyon, Lille and Le Havre in southern Europe; Poznan, Wroclaw and Prague in Central and Eastern Europe; and the Midlands, London and the south east in the UK.
Supply of modern Class-A distribution facilities remains low across all European markets. In the fourth quarter, Prologis Europe initiated four developments, totalling 126,800 square metres, one of which was speculative – a 14,000 square metre build-to-suit facility for TOMRA in Bratislava, Slovakia.
In the fourth quarter, Prologis Europe acquired eight facilities totalling 213,700 square metres, for a total investment of EUR151m, including a 172,100 square metre portfolio in Germany on behalf of Prologis European Properties Fund II; and a18,400 square metre facility in Spain on behalf of Prologis European Properties Fund II.
In the fourth quarter, Prologis Europe contributed 30 assets (including two land plots) totalling EUR436m to four European co-investment vehicles: Prologis European Properties Fund II, Prologis Targeted Europe Logistics Fund, Prologis Europe Logistics Venture 1, and Prologis European Logistics Partners.
In addition, the company disposed of 123 acres of non-strategic land in the UK, France, Poland, and the Czech Republic for a total of EUR30m.
“Our fourth quarter operating performance was strong as occupier confidence continues to improve and broaden geographically,” says Philip Dunne, president, Prologis Europe. “Growing demand, particularly among our e-commerce customers, combined with limited supply and the ongoing reconfiguration of the supply chain, contributed to rental growth for the first time in six years. The company is well positioned to leverage improving market fundamentals for further growth in 2014.”