Seoul-based Vestas Investment Management has acquired a distribution centre in central Poland on behalf of Korean institutional investors for €71 million ($78 million), as the European logistics market continues to draw Asian capital.
Savills Investment Management said in a statement yesterday that it had linked up with the Seoul-based asset manager to complete the acquisition of the 123,000 square metre (1.3 million square foot) warehouse from Invesco Real Estate, the property arm of the US investment giant.
The purchase brings Vestas IM’s European logistics assets under management to €1 billion – €470 million of which is managed in partnership with Savills IM, according to the UK-based firm.
“The transaction underlines the attractiveness of central Poland both for institutional investors and the occupier market,” said John Palmer, who is head of industrial investment in Poland at the investment manager’s parent company Savills.
The acquisition is the second time in just under a month that Vestas has teamed up with Savills IM to purchase industrial properties, following the Seoul-based firm’s purchase of a property portfolio that included an office building and two logistics assets in Denmark.
Acquiring a Sought-After Asset
Located 40 kilometres north of the city of Lodz, which serves as a major logistics hub for both domestic and international networks, the newly developed facility is the largest single-storey build-to-suit warehouse in Poland.
“From an investment fund perspective the location is core, in demand and highly sought after,” Palmer said, adding that the distribution facility’s central location makes it attractive to large retailers, manufacturers and third-party logistics companies serving domestic and international clients.
Developed by global warehouse builder Panattoni, Invesco had forward-funded the project, completing its purchase once the property was completed last year.
French home improvement and gardening retailer Leroy Merlin has consolidated its Polish logistics operations in the facility and has committed to lease the entire facility for ten years.
“The successful sale is a reflection of the promising combination of a good asset with a stable, trusting long-term tenant in a strong location,” said Petr Sramek, Invesco Real Estate’s director of central and eastern European transactions.
Rushing into European Logistics
Vestas IM makes its latest European logistics acquisition as Asian investors race to get a slice of the stable returns that warehouse properties have been generating.
Just last week, Singapore-based alternative asset management firm Elite Partners Capital announced the first close of a UK and Europe-focused logistics fund with a target hard cap of €150 million, after acquiring four million square feet of logistics space in Poland and the United Kingdom.
Ten days before that announcement, GLP doubled its European logistics footprint through the €1 billion acquisition of Goodman Group’s central and eastern European logistics assets through the Singapore-based giant’s Gazeley unit. The company, which is Asia’s largest warehouse developer and fund manager, now has almost five million square metres of logistics space across ten countries in Europe.
In a deal announced last December, Singapore’s sovereign wealth fund, GIC, ramped up its European logistics holding by agreeing to acquire a 28 asset warehouse portfolio from Apollo Global Management for about €950 million.
Accelerating Demand for Space
Even amid the market turmoil caused by the COVID-19 pandemic, analysts are predicting the logistics sector in Europe to thrive, with limited warehouse space in the region continuing to push up rents.
Annual prime rents for logistics assets across the European market grew by six percent during 2019, according to a report released by Savills just last week, which predicted that the recent upsurge in online shopping as a result of COVID-19 would accelerate demand for warehouse space.
“Online retail sales growth continues to exceed analysts’ expectations and given the COVID-19 outbreak has increased consumer dependence on e-commerce, it is likely that this shift will accelerate faster,” the authors of the report noted.
According to Savills, latest forecasts indicate that online retail will account for 17.8 percent of Western Europe’s total retail sales by 2024 – up from 11.8 percent in 2019.