Industrial giant Prologis is expecting to have to be “more selective” in its UK acquisition strategy in 2015, as the investment market continues to heat up.
Prologis Europe president Philip Dunne said the firm’s activity would be weighted more towards development than in 2014, to capitalise on low supply in the recovering UK and northern European markets.
Dunne added that this development activity was also likely to diversify away from the build-to-suits, which comprised 85% of European activity last year.
He said that the ratio of speculative to build-to-suit activity could be as much as 50:50 in 2015.
Southern Europe and central Europe, meanwhile, are to be strong targets for Prologis acquisitions in the coming year.
However, Dunne added that he believed capital compression had some way to go before peaking.
Reporting its Q4 2014 results today, Prologis Europe said its occupancy rate closed the year at 94.9%, an increase of 140 basis points on the quarter and 130 basis points over the year as a whole.
The firm invested €915m (£684m) in Europe over 2014, along with $3.1bn (£2bn) globally. Some €500m to €600m of development value is expected over the next year in Europe.
Prologis leased more than 10m sq ft in Q4, and nearly 40m sq ft across the year as a whole through its 154m sq ft portfolio. Demand was driven by supply chain reconfiguration, trade and e-commerce.
The company would also continue to seek a long-term divestment from its small holdings in Austria and Romania, the report said.
Dunne said: “The focus this year is likely to be on getting deeper into the markets we’re already in as opposed to going wider. We’re looking to grow the size of the portfolio.
“That’s not to say we won’t buy in the UK or northern Europe, we’ll just be a lot more selective about what we’re after.”
