US developer Panattoni is taking over the momentum in CEE with extra large projects for e-commerce giant Amazon.
After propelling Sydney-listed Goodman Group for several years in Germany, Amazon is now helping Panattoni expand its footprint in Central and Eastern Europe. ‘E-commerce players are huge users,’ Panattoni’s CEO Robert Dobrzycki told PropertyEU. ‘They have significantly helped lift our volumes.’
Amazon is the most visible example of the e-commerce growth story, but there are others, Dobrzycki said, pointing to Zalando, H&M and Inditex. ‘All of these players are expanding and increasing their logistics space.’
On average, e-commerce clients require spaces of at least 100,000 m2, Dobrzycki pointed out. Volumes have increased slightly in recent years, but there are limits, he said. ‘A logistics space of 200,000 m2 is not efficient. A facility of around 100,000 m2 is optimal.’
Altogether Panattoni has built, or is working on, five facilities totalling 681,700 m2 for Amazon in Poland and the Czech Republic, of which three are completed and two are under development.
The European arm of California-based Panattoni Development Company has seen its portfolio almost quadruple in terms of completed projects in the past seven years. However, it saw the biggest rise in the past 12 months from 1.15 million m2 to 2.7 million m2, an increase of no less than 145%.
The figure earned the company the top spot in PropertyEU’s latest ranking of leading logistics developers in Europe, ahead of Goodman Group with 2.2 million 2 and Prologis with 2.1 million. This is the first time that Panattoni has taken the top spot since we launched our survey in 2011.
The ranking is based on projects completed over a three-year period, in this case between 2014 and 2016.
Big push for CEE
Until recently, Amazon’s deepest footprint was in Germany where Goodman pioneered the company’s first extra large shed in Leipzig in 2006. Panattoni seized the opportunity when Amazon made a big push for CEE, Dobrzycki said.
‘This was an obvious chance for us given our strong position in CEE, in particular Poland. We took over the momentum in CEE. We now have a lot of experience with large-scale projects and hope to capitalise on our e-commerce expertise in Western Europe.’
In addition to big boxes, Panattoni also develops production facilities for manufacturing and assembly, especially for the automotive sector. ‘The big boxes are a big part of what’s happening in CEE, but we are also enjoying strong demand from clients that are moving production from Western Europe and that positive pressure will continue.’
The company is capable of undertaking diverse projects from small formats to record-breaking spaces, up to 161,500 m2 in a single facility, he added. 'Our very successful 2016 followed by a good start to 2017, stimulated by strong growth in e-commerce and the general improvement in economic conditions across Europe, promise that good times are ahead for the warehousing market in terms of investor activity.'
Panattoni is still expanding in the CEE region, Dobrzycki confirmed. ‘Growth-wise, CEE is the best part of Europe, especially in terms of the cost of land, labour and production. We are still seeing a lot of demand. I think CEE will be the most dynamic part of Europe for a very long time.’
Since coming to Central Europe, Panattoni Europe has delivered more than 4.7 million m2 of modern industrial space altogether in Poland, the Czech Republic and Germany, and currently has close to 1 million m2 under development there.
Apart from Poland, Panattoni Europe is also present in the UK, the Czech Republic, Luxembourg, Germany and Romania.
Financing
In recent years, institutional capital and private equity have been drawn to the logistics sector and Panattoni, too, has been approached by capital sources who wanted to the company on an exclusive basis, Dobrzycki conceded. 'That business model certainly has its attraction, but we like who we are.’
Panattoni doesn’t rely on one source of capital, he added. ‘We have multiple strategies and work with a wide spectrum of investors on a non-competing basis. We develop a lot of volume and don’t have a single strategy.’
In addition to Amazon, other key clients include Arvato, Coty Cosmetics, General Electric, TNT, DSV, H&M, BSH (Bosch), Carrefour, Kaufland, Tesco, Castorama, Intermarché, Jago, Leroy Merlin, Selgros, ND Logistics, Still, Schenker, Tchibo.
