Panattoni seeks bigger slice of Europe

For all the talk of disruption across industries, Panattoni Europe, a US-headquartered developer of industrial space, sails the calm waters of an industry that has not changed much over the past couple of decades. According to Robert Dobrzycki, the company’s chief executive officer, Panattoni has not had a major rethink of its business since entering Europe more than a decade ago.

“We had to adjust to the explosion of e-commerce and, for example, warehouses these days have to have more loading docks or have to be able to accommodate more people – but for the most part they do not differ from the types of facilities built 10 or 15 years ago,” says Mr Dobrzycki.

The industry might not be changing, but the opportunities that can be found in the warehousing sector are. According to an analysis by software, outsourcing and consulting firm GEP, the European warehouse sector enjoys estimated occupancy rates of 95% and a stable demand for large, prime warehouse facilities located close to large cities.

“Upgrades of new warehouses, e-commerce growth, continued demand and investor interest will lead to warehouse growth in European markets in 2017, despite economic uncertainty,” says the GEP analysis. It is no wonder, then, that Panattoni has a growing appetite for launching new projects, especially since the company’s occupancy rate beats GEP’s already high numbers, at an estimated 98%.

Western expansion

Company executives, according to Mr Dobrzycki, are looking towards western Europe, particularly in Germany. “That market is centrally located and is characterised by a very good production base and strong consumer demand, so it has all the components that we need,” says Mr Dobrzycki. He adds that similar assets can also be found in France, another market where Panattoni might consider potential expansion in the near term.

Apart from Germany and France, the UK looks increasingly attractive to Panattoni. Last year’s vote to leave the EU, rather than deterring the company, has made it even keener to explore opportunities there. “It is a very mature market, highly competitive and the entry barrier is very high,” says Mr Dobrzycki. “Therefore it is easier to enter such a market during times of uncertainty, such as now, following the Brexit vote.”

Panattoni’s bold approach towards expanding into highly competitive western European markets may well pay off as the market outlook, published by Colliers International, predicts these countries are among the locations where demand for warehousing demand will grow the most by 2020.

“Even in the most active markets – such as France, Germany and Poland – we are seeing vacancy rates drop to unprecedented low levels of about 5% to 10%. Retailers are moving quickly to secure space as online sales grow across the continent,” says Andrew Gulliford, chief operating officer at property investment and development company Segro, in the Colliers report.

All in store

Panattoni is yet to launch in the UK, but in continental Europe the company has a portfolio of warehouses and built-to-suite facilities constructed for such customers as Amazon, H&M and Nestlé. And while the company gives economic developers and land owners an opportunity to submit plots of land for consideration for future projects, Mr Dobrzycki says Panattoni does not enter markets where it does not have local representation.

“We have strong local teams and experts with local knowledge. For example, in Germany we have four teams and they know where good real estate for projects can be found and what places are the right fit for us, business wise,” he says.

Though in-house experts screen investment sites, the help of economic developers is welcome, he says. “We do not expect anything extraordinary from local authorities and economic developers, but definitely appreciate a helping hand that can assist us with issues such as obtaining construction permits or access to utilities. However, such help is not readily available in every location that we are interested in,” he adds.

Here, economic developers can make a difference, he says, turning Panattoni’s attention to sites that would have otherwise not make the company’s short list. “We are definitely open to working with local authorities,” says Mr Dobrzycki.

No rush for tech

This year’s Mipim, an annual real estate show held in Cannes in March, showed that apart from the traditional in-house research and help from economic developers, real estate companies have a growing toolkit of property technology, or prop tech, solutions at their disposal, enabling them to obtain data on real estate. Such solutions can provide information ranging from plot ownership and size to demographic outlay of the surrounding area.

Mr Dobrzycki says Panattoni Europe does not currently use proptech tools in its site-selection decisions, but, as with the example of retail giants losing ground to e-commerce shows, tried-and-tested methods can no longer be taken for granted. “Internet changes everything, so we might consider implementing data-driven tools in the future,” he says.