Quote from Ben Bannatyne, President, Prologis Europe:
We closed the fourth quarter of 2023 with a solid pipeline, a healthy uptick in development and vacancy levels well below market average. Given current conditions, demand for quality and sustainable warehouse space remains strong, particularly in dense markets like the UK, the Netherlands and Germany. Across all European markets we continue to be focused on our customers success, providing solutions through our industry-leading Prologis Essentials platform, strategic landbank and the best team in the business.
Operating Performance – Fourth Quarter and Full Year 2023:
Total portfolio: 22.5 million sqm Third quarter total leasing activity: 637,075 sqm**: 160,796 sqm new leases 476,279 sqm renewals Occupancy: 97.7% Q4 Rent change: 34.4 %** Full year rent change: 27.3%*** includes operating, development, held for sale, other and VAA/VAC
** based on lease start date
Operating Performance Central Europe & Poland – Fourth Quarter 2023:
CE total portfolio: 4,92 million square meters Fourth quarter total leasing activity: 348,367 square metres: 55,321 square metres new leases 236,443 square metres renewals 56,603 square metres short term contracts Occupancy: 95.7%*Poland total portfolio: 2,38 million square meters Fourth quarter total leasing activity: 268,711 square metres: 39,579 square metres new leases 159,789 square metres renewals 36,749 square meters short term contracts Occupancy: 93.0%*
* operating portfolio
Leasing Highlights Fourth Quarter 2023:
30,501 square metres at Prologis Park Coventry DC10, for IFCO Systems in the UK.21,868 square metres at Prologis Park Plessis Pate DC1, for Alive Events in France.
19,779 square metres at Prologis Park Dabrowa DC1C, for BCUBE Poland Services Sp. z o.o. in Poland 13,823 square metres at Prologis Park Moissy DC5, for EXPERIS France in France
Capital Deployment – Fourth Quarter and Full Year 2023:
Developments Starts:
Total development activity in the fourth quarter was 137,833 square metres, in the Czech Republic, Poland, Germany, Italy and the UK, of which 55.6% was build-to-suit.Full year 2023 saw 26 development starts totalling 356,545 square metres, of which 60.3% was build-to-suit.
Additional commentary from Ben Bannatyne, president, Prologis Europe:
Over the past 12 months, our Prologis Essentials business has increasingly provided vital continuity for our customers’ operational needs. We understand that local requirements such as permitting are increasingly linked to ESG vision and measurable social impact, which is why our solutions in the areas of operations, energy + sustainability, mobility and workforce continue to evolve to stay ahead of what’s next. In the field of energy for instance, we ended the year on a high, reaching the halfway milestone of 500MW of on-roof solar generation and battery storage; putting us well on the track to surpassing our own goal of 1GW by 2025.
A note from Eva van der Pluijm-kok, vice president, Prologis EU Research:
Prologis has released its annual Seven Predictions research for the coming year. Our outlook highlights 2024 as a year of healthy demand growth, constrained supply, technological evolution of logistics facilities and a turning of the capital markets cycle.
What we see for 2024:
Looking at the double-digit growth in port and truck traffic, the global freight recession is expected to reverse.
The Great Construction Bust will intensify, with global starts hitting their lowest level since the 2008 financial crisis.
Latin America has experienced record demand and this will continue into 2024, especially in Mexico as nearshored manufacturing capacity comes online.
Net absorption in China will reach the second highest level on record, helping to work through excess supply from the past few years.
Technology, especially artificial intelligence, will drive up energy requirements in logistics facilities, incentivising warehouse owners to double solar capacity.
Interest rate declines will double private equity real estate funding in 2024.
European cap rates expected to compress while expansion rotates to Asia.
