· The year ended on a strong note, with the highest levels of demand occurring in the fourth quarter.
· Customer sentiment is still “net positive” but we note an uptick in caution throughout the fourth quarter—the result of scarcity of product, lagging global economic performance and persistent uncertainties such as Brexit.
· Speculative activity continues to increase, in part due to limited opportunities for existing product in capital markets, which in turn has pushed investors toward development.
· Retail and e-commerce continue to be the biggest demand drivers; there is some caution around the automotive industry.
- Market rents grew by 5.1% in 2019, with Hungary, Poland, Sweden and UK showing the most robust rent change.
Operating Performance as of December 31, 2019:
· Total portfolio: 18.0 million square meters*
· Period-end occupancy: 96.9%
· Total leasing activity: 880,000 square meters:
o 216,000 square metres of new leases
o 665,000 square metres of lease renewals
· Full year 2019 leasing activity was 3.02 million square meters, roughly flat compared to the previous year but representing a 16.7% rent change:
o 832,000 square meters of new leases
o 2,2 million square metres of lease renewals
*includes operating, development, held for sale, other and VAA/VAC
Capital Deployment – Fourth Quarter and Full Year 2019:
· Our total development activity in the fourth quarter was 538,000 square meters, of which a healthy 48.6% was built-to-suit in key logistics markets close to consumption centres with good access to labour. Of note:
o 7 build-to-suit starts at a combined total of 262,000 square meters in Italy, Poland and the United Kingdom.
o 14 speculative starts at a combined total of 277,000 square metres in France, Czech Republic, Germany, Hungary, Italy, the Netherlands, Poland, Sweden and the United Kingdom.
· We focus on providing our customers with logistics solutions in the core markets that enable their business needs. In 2019, there were 40 new development starts totalling 959,000 square meters, at 61.4% leased, of which 58.2% was built-to-suit:
o 21 built-to-suit starts with a combined total of 558,000 square meters.
o 19 speculative starts with a combined total of 401,000 square meters.
Acquisitions & dispositions in the fourth quarter:
o 5 buildings were acquired with a total net rentable area of 96,000 square meters.
o 10 land parcels were acquired with a total land area of 719,000 square meters.
o Two building dispositions took place totalling 56,000 square meters, and three land parcels comprising 175,000 square meters were sold.
Over the full year, Prologis acquired 47 buildings with a total net rentable area of 984,000 square meters and 27 land plots totaling 2,3 million square meters. The company also disposed of six buildings with a combined total of 146,000 square meters and five land parcels totaling 234,000 meters.
Additional 2019 Highlights:
o Top Solutions to Source, Train and Retain Labour in Logistics Facilities—Prologis Research (March)
o Prologis acquires highly complementary portfolio in Sweden (April)
o Opening of carbon-neutral facility at Muggensturm, Germany (May)
o Prologis Park Tilburg DC5 in the Netherlands achieves WELL-gold certification (June)
o European logistics portfolio acquisition: Colonial (August)
o Building 3, Prologis Park Prague Airport received BREEAM “Outstanding” accreditation (August)
o The Evolution of the Modern Supply Chain and Implications for Logistics Real Estate Performance—Prologis Research (November)
Source : Company