Thursday, July 12, 2018

Logistics Property Construction Surges on a Global Scale

Prologis Inc. said it completed 16 construction projects totaling almost 6.3 million square feet in the first six months of the year, including almost 1.4 million square feet of new logistics space for two tenants at the developer’s 1,800-acre master-planned industrial park in California’s Central Valley.

However, the bulk of the developer’s activity in the first half of the year was outside the United States. Prologis said it finished a new distribution center for Amazon in Mexico City totaling almost 1 million square feet, and a nearly 610,000-square-foot facility in Paris for Cultura, and wrapped up other large projects in Poland, Czech Republic, Italy, Spain and The Netherlands.

In the U.S., the San Francisco-based real estate investment trust, which is the world’s largest owner and developer of logistics buildings, wrapped up a 708,080-square-foot distribution center for Switzerland-based Lindt Chocolate and a 664,000-square-foot warehouse for San Leandro, CA-based mattress maker Zinus, both within its Prologis International Park of Commerce in Tracy, CA.

Prologis also finished construction on a 504,428-square-foot regional distribution building for Home Depot in Cranbury, NJ, and an 80,000-square-foot warehouse for JAS Forwarding in Chicago.

The company expects its development pipeline will flow steadily for the near future. Prologis this week reported started new projects totaling more than 6.2 million square feet with a total expected investment of $475 million in the first six months, including a 567,870-square-foot facility for an unidentified tenant in Tracy and three buildings totaling about 480,000 square feet for tenants in Dulles Commerce Center in Virginia.

Most of the new construction starts are for customers occupying multiple Prologis sites in the U.S. or around the world, the company said.

"Our multi-site customers, many of whom are focused on e-commerce, continue to drive strong results in our build-to-suit business," said Prologis Chief Investment Officer Michael Curless. "Our development activity is focused in major population centers because our customers need facilities close to their end consumers."

In addition to its development projects, Prologis was also active in the mergers and acquisitions during the first half as well, announcing an $8.4 billion merger with Denver-based DCT Industrial Trust Inc. in April. DCT shareholders will vote on the transaction, recommended by the company’s board, at a special meeting scheduled for Aug. 20.

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