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Paweł Sapek: ESG measures and investments in modern, cost-efficient warehouse parks assume greater significance

17.05.2024 Reports

In 2023, the Polish warehouse market experienced a period of dynamic changes that set new directions for development and challenges for the industry. In the REDD Report: Warehouses 2023 Summary /2024 Outlook, we present how the market situation evolved in 2023 and forecast the changes that 2024 will bring. We sought comments on the most important changes and upcoming trends from experts in the commercial real estate market. Below is a statement from one of them.

Paweł Sapek, Senior Vice President and Regional Head for Central Europe, Prologis

CHALLENGES:

The upward trajectory in rents has persisted unabated for over two years, with forecasts indicating its continuation into 2024. While the growth rate is projected to moderate to single digits, it holds the potential to counterbalance any further increases in capitalization rates.

Closing the fourth quarter of 2023 saw robust investment plans, a steady uptick in new constructions, and a vacancy rate well below the market average. Despite prevailing circumstances, demand for high-quality sustainable warehouse space remains robust, particularly in markets characterized by limited land availability and intense competition, such as the UK, the Netherlands, and Germany.

In Poland, our focus for the year ahead remains centered on the development of our five key locations: Warsaw, Wrocław, Poznań, central Poland, and Upper Silesia. Leveraging our land holdings in these regions, we aim to construct over 0.5 million square meters of new space. Simultaneously, we are diligently evaluating the investment landscape, actively seeking opportunities to acquire existing warehouses and larger property portfolios. Our primary objective for 2024 is to sustain the upward momentum in rents and maintain a high customer retention rate. To achieve this, we will prioritize delivering enhanced value to our customers through asset management initiatives and maintaining close customer relationships. Additionally, we plan to further enhance Prologis Essentials, offering comprehensive warehouse solutions for sustainable logistics in an appealing financing model.

TRENDS:

Considering that the vacancy rate has indeed been trending upward since the onset of 2022, reaching a notably high level nearing 8 percent in the third quarter of 2023, it’s reasonable to anticipate that positive developments may not yield immediate, significant impacts. Consequently, developers face the challenge of retaining existing customers and attracting new ones to fill the increasing number of vacant warehouses. In this context, ESG measures and investments in modern, cost-efficient warehouse parks assume greater significance. At Prologis, we are continuously enhancing the energy efficiency of our warehouses, with nearly 80 percent of the electricity consumed by our customers sourced from renewable energy. Over the past year, we have made significant strides in solar power generation. Prologis’ rooftop photovoltaic panels now generate 500 MW of energy, putting us halfway towards our target of 1 GW by 2025. Moving forward, we remain committed to our existing ESG initiatives in 2024, investing in employee well-being, energy efficiency, and optimizing customer operations. Our longstanding annual ESG report, launched in 2013, stands as a testament to our ESG achievements and commitments. In addressing climate change, both in our operations and supporting our customers, remains paramount at Prologis.

When it comes to the environment, mitigating climate change through our operations and supporting our customers in doing the same is paramount at Prologis. Our customers are increasingly focused on reducing their climate impact, and we assist them in various ways — from striving for carbon neutrality in newly constructed or retrofitted facilities, to optimizing facility management for maximum efficiency, to implementing circular design principles. We offer a comprehensive suite of sustainability, renewable energy, and mobility solutions.

For us, Environmental, Social, and Governance (ESG) principles encompass more than just constructing green buildings; they also involve ensuring that our buildings harmonize with their surroundings. We refuse to accept situations where buildings are challenging to access, lack communication infrastructure, or present difficulties for employees commuting to work. Our goal is for all these elements to synergize, positively impacting not only the environment but also the work environment and the local community. This commitment applies to both new constructions and acquired warehouses. We continually seek opportunities to upgrade the properties we acquire to align them with our sustainability objectives.

 

The original comment appeared in the REDD Report: Warehouses 2023 Summary /2024 Outlook. The full report is available for download through the form below.

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