P3 Logistic Parks is a long-term investor, manager and developer of warehouse properties in Europe. The company has been operating warehouses in Romania since 2015, when they acquired a logistic park in Bucharest.
P3 has an extensive presence in Europe, how is the Romanian business positioned in broader context? And what vision are you pursuing here at the moment?
Yes, it's true, we already have a strong footprint in Europe and we continue to grow at a fast pace. P3 is present in 12 European countries and has over 6,5 million m² of assets under management, and a land bank of 1,2 million m² available for further developments. Only in the last year we made two major acquisitions across Europe, thus adding 1,5 million sqm of GLA to our global portfolio, on top on the 600,000 sqm of greenfield developments that were finalized in 2020.
P3 Romania represents around 6% of the entire company portfolio. In terms of vision, like in the rest of Europe, we want to become market leaders. We rank third at the moment, so the intention is to consolidate our presence here and be perceived as the most desirable provider of logistic spaces on the market. Our foundation is strong and the ambition achievable because we offer truly integrated services: from property management, to asset management and development of new buildings, tailored to the needs of our clients.
P3 announced intentions to consolidate its footprint in many of the countries in which it does business, what is the plan for Romania more specifically?
We're counting on a two-step plan. Short-term, the goal is to consolidate our existing park by adding new facilities that will help with the access to & retention of workforce. The idea came after numerous talks with our tenants; which clearly indicated that workforce availability and retention was a real challenge for them. So today we find ourselves on a mission to create an environment in which workers feel good, so that they stay on board for the long run. For instance, we added a 200-seat canteen with an exterior patio, and we're working on a 212 beds hostel for the park workers. The pandemic slowed us down a little on this front but we are moving forward with construction works.
The long-term goal is to increase our leasable area as well as our geographical coverage. Currently, our entire portfolio is concentrated in a single park (P3 Bucharest A1) with a surface of 380,000 m². Here we have also an additional land bank of 160,000 m². In addition, we are constantly monitoring the market in other big cities in search for new opportunities.
How do you go about identifying new plots of land? Some of your peers mentioned it can be difficult nowadays to find and secure truly good ones, do you agree?
Indeed, it's not easy! A valuable plot is a complex concept that involves good location, easy road access and nearby utilities. While there are still good spaces up for grabs, our hope is to see more focus on infrastructure - the more it develops, the more viable plots open up as result.
Looking at the industries you host in your spaces, what are the most prominent ones?
Since our park is located in Bucharest, we concentrate on the logistics and retail sectors. Around 50% of our portfolio is represented by retailers (food products, fashion etc.). Another 35% is made of logistics companies and 15% goes to miscellaneous ones (e.g., pharma).
One thing worth highlighting is that all of our clients benefit from the one of a kind 15,000 m² railway cargo terminal in our park. Furthermore, close to the end of 2020 we signed a collaboration agreement with CFR (the National Railway Company) and today 12 trains circulating the Bucharest-Rosiorii de Vede - Craiova route have a permanent station near our park's gates. It is a brilliant development and something that makes us unique among our competitors.
You mentioned the pandemic earlier and how it affected some facilities in your park. Can you expand on the positive and negative aspects you came across during this period?
The general perception that the logistics sector wasn't too much affected by the pandemic is well founded. We saw some unexpected benefits when the lockdown was instated because 60% of our tenants were food and e-commerce clients. Their activity skyrocketed even more than during Black Friday or the holiday season! As a result, investors were prone to request more warehouse space. On the down side, certain tenants registered a significative decrease in their activity in the first part of 2020 (non-essential sectors like fashion, automotive, etc.). The supply chain had some hiccups too: for example, one recent development was a steep increase in the transportation cost of containers from China.
The logistics sector is now enjoying the spotlight, but what advantages do you think will be preserved on the long term?
I think that the perception of how vital this sector is will definitely persist, even after the pandemic is over. E-commerce growth was also accelerated by last year’s events – to the point that we are not talking anymore about a niche segment, but of mainstream. The positioning of online commerce as a dominant trend will, too, transcend this period. Actually, the logistics and industrial sector benefits a great deal from this trend because online shopping requires 3-4 times more warehouse space than traditional retail. This is due to the fact that part of the processes that were done in-store are now "moved" into the warehouse (opening the pallets, picking individual product, packaging and sending it to the final consumer). On top of these, there is also the return flux that needs its own space.
It is clear that you see a lot of opportunity in the Romanian market, what are in exchange some of the challenges a company like yours faces here?
Infrastructure remains the main challenge for our sector, and here I would like to point that there are two aspects to be taken into consideration. First of all, the Romanian infrastructure is underdeveloped, so it prevents the country from reaching its full potential in attracting new companies that would look to establish large regional distribution hubs here. Secondly, there is a lack of predictability. The structure of the local market continuously changes as new infrastructure is being built, but the lack of dependable timeframes for such infrastructure works makes it difficult to build a strategic plan around those future road developments.
Ending on this "opportunities vs. challenges” note, do you have a final message for foreign investors?
Romania has the accelerated development perspective of an emerging economy and at the same time it offers economic stability thanks to its position inside the EU. For this reason, investors have a strong business case here.
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