ProLogis (PLD), a leading global provider of distribution facilities, has recently signed two new leasing agreements spanning about 723,000 square feet of its development portfolio in Europe.
About 530,000 square feet of space were leased to ASOS, the largest independent online fashion and beauty retailer in the U.K. The lessee will occupy the space at ProLogis Barnsley in South Yorkshire, bringing the facility to 100% leased. With the new lease, ASOS would relocate its distribution hub from Hemel Hempstead in southeast England, where it occupies a 158,250 square feet ProLogis facility. The strategic move is aimed at increasing its geographic presence through significant expansion after a successful year in which sales increased by 35%.
Furthermore, the hourly rate for employees working in storage and distribution in South Yorkshire is approximately 16% lower than the national average. Consequently, the leased property offers an upside potential to ASOS. Year to date, ProLogis has signed six new leasing agreements in the U.K. aggregating 1.7 million square feet. The continued leasing activities in the region show signs of stabilization in the industrial property market after a prolonged recession that pushed back the sector.
The company also leased 193,000 square feet of space at ProLogis Park Pilsen-Stenovice Building I near Pilsen, Czech Republic, to Sony Corporation (SNE), a leading global manufacturer of electronics products. ProLogis Park Pilsen-Stenovice is a distribution park strategically located adjacent to the D5 motorway that connects Prague and West Germany. The industrial park is ideal for logistics and distribution activities with ambient storage, light manufacturing facilities and other value-added services.
With improving property values and growing institutional demand for quality properties, ProLogis has witnessed a growing customer interest in new build-to-suit development projects across the globe. In addition, leasing decisions that were earlier postponed due to volatility in the markets are gradually coming off the shelf.
ProLogis owns and manages interests in over 2,500 distribution facilities, service offices and properties spanning 475 million square feet of space (including properties under development), of which approximately 127 million square feet is located in Europe. The company leases its industrial facilities to over 4,400 customers, which mostly include manufacturers, retailers, transportation companies, third-party logistics providers and other enterprises with large-scale distribution needs.
We maintain our Neutral recommendation on ProLogis.
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