Our Market
Europe has been at the forefront of a new era in which global trade has had a staggering impact on the global distribution and logistics market. The opening of European borders has enabled companies to pursue regional or pan-European distribution networks as opposed to the former country-by-country approach. In addition, manufacturing has migrated towards Central and Eastern Europe where companies can benefit from lower labour costs and proximity to the major consumer markets of the West, thereby significantly reducing transportation costs.
The vast majority of global trade is transported by sea, with modern container shipping a key enabler of the broader trend towards globalisation due to the incredible cargo transport efficiencies it delivers. PEPR’s strong presence at five of the top 10 European ports is a key competitive advantage for the business and the customers it serves.
However, the market outlook for 2009 is challenging, with weakening economic forecasts pushing most European countries into recession. The impact on the real estate market has been increasing yields across all sectors and an emerging downward pressure on rents. Customers are taking longer to make decisions and are requesting shorter, more flexible leases to help them manage the potential effects of a slowdown in consumer spending.
However, the continued dearth of available credit and rising property yields have resulted in a sharp decline in supply of new distribution space. This, combined with unwanted relocation costs, means that customers are more likely to stay in their current premises.
PEPR’s major operational priority for 2009 is to maintain its industry leading occupancy levels across the portfolio. To do this it will continue to leverage its relationship with ProLogis, whose strong network of customers and local market expertise enable PEPR to anticipate customer expectations and consistently meet their requirements. In addition, PEPR will look to maximise the opportunities provided by the significant reduction in new supply of comparable distribution facilities in the market place.
