Prologis is a leader in logistics real estate with a 22% market share in CE, across four countries: Poland, the Czech Republic, Hungary and Slovakia. Over EUR 2 trillion worth of goods flows through Prologis warehouses each year.
Two years ago, you were promoted to regional head CE – from this perspective, what is your vision for Prologis in the region?
I have 25 years of experience in construction and real estate, but my initial background was in project management for the automotive sector across Europe. For the last six years, I’ve been working with Prologis in Poland, the Czech Republic, Hungary and Slovakia. While we have the highest market share of any real estate company in CE, we strive to maintain a strong focus on our customers and to always keep innovating: the industrial sector must constantly evolve to reflect new customer needs and trends.
How does Poland fare in your wider portfolio and compared to the other three CE countries?
The last two decades have been marked by continuous growth in CE, meaning emerging markets in our portfolio have had ample development opportunities. We have a significant presence in the CE region, with 4,2 million m² spread across 217 buildings and 22% of the overall market share. Poland is by far our largest market in CE, and we see the greatest potential for further growth here too. Our strategy is to focus around large urban agglomerations, and Poland has the biggest ones: Warsaw, Central Poland, Poznan, and Silesia.
Recently, retail & residential players have been trying to set up shop in the almost impenetrable logistics sector. You are in a strong position, but what challenges are you facing at the moment?
It's true that last year’s market dynamic pushed many investors towards diversifying or even totally revamping their portfolios, and logistics & industrial were among the most sought-after markets. Rental levels in Poland are incredibly low compared to the rest of Europe (they are almost 30% lower in Poland than in the Czech Republic and Hungary). This is a positive for customers, of course – but if this trend continues, investors might run into profitability issues in the near future.
It does pose question marks for the longer term – what are you doing to mitigate this risk?
One of our responsibilities as a market leader is to educate, and to encourage a healthy balance between rent prices and development costs. The Polish market still needs greater transparency on these issues. I believe Poland will always be a low-cost option for customers – but the market does indeed need to become equitable in order to be fully profitable, with continuously rising land prices and development costs.
Turning our attention to how the pandemic has affected the logistics segment – how did the crisis affect your business and what changes did you have to deal with?
Our first concern was to ensure the health and safety of all our employees, as well as the employees of customers working at our parks. Business-wise, we were lucky because our portfolio is varied and solid, meaning we were able to overcome challenges without too much trouble. Nonetheless, we were sad to see three of our medium-sized customers (a small percentage of our overall portfolio) file for bankruptcy. The CEE market has, generally speaking, been more resilient than the market in Western Europe. Customers quickly realized the incredible importance of the logistics sector: demand from most sectors remained steady, and as we slowly recover from the pandemic, demand is returning from the automotive and other core sectors too. In fact, in 2020 we signed four leases with automotive suppliers, mainly for electric cars parts.
The logistics & industrial sector has been associated with pollution and high energy consumption – what solutions are you implementing to change this negative perception?
We are implementing a wide range of measures to minimize our carbon footprint across Europe, and around the world. 100% of our new buildings are designed according to sustainable building certification criteria. We have surpassed 200 MW of installed solar power capacity, with a new goal of 500 MW by 2025. We plan to implement full LED lighting across 100% of our global portfolio by the same year, while 100% of our portfolio has cool roofing solutions, where applicable. We are the world’s first real estate company to have an approved Science Based Target (SBT) for emissions, with the aim to reduce greenhouse gas emission by 21% by 2025, and by 56% by 2040. We partner with Cool Earth to help fund the protection of rainforests – our commitment is such that for each new Prologis building, we protect an area of rainforest 31 times the size. We’re also committed to ensuring biodiversity at our parks, with the implementation of nests, damp areas, specific types of vegetation, and even bee hives to provide homes for wildlife wherever possible. Such solutions also form part of our PARKlife initiative to boost the quality of life of everyone working in our parks, through the introduction of recreational areas and green spaces. With these steps aimed at decreasing our carbon footprint, making parks a healthier place to be, and protecting the natural world, we are working together with our customers to be ahead of what’s next when it comes to making logistics real estate a more sustainable and environmentally-friendly industry.
You have a lot on your plate – but what are your priorities for the next two-three years?
Our plan is to offer integrated solutions that go beyond the four walls and a roof of a warehouse. We want to provide additional services helping our customers’ businesses run more smoothly, in so doing providing value beyond real estate. Our ultimate goal is to become a services-oriented company, rather than being a real estate developer alone. More specifically, we are going to combine warehouses fitted with top-notch logistics infrastructure (racking, mezzanine, conveyors), great financial offers for leasing, and the provision of material handling equipment.
Do you have a final message about Poland's logistics and industrial sector?
I would say that the Polish market is continually growing, and is showing excellent progress both in terms of transparency and rent value. I believe investors can truly thrive here.
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