4 August 2010
In July 2009, Prologis had around 850,000 sq ft of vacant speculatively-built space at Prologis Park Stafford, Prologis Park Coventry and Prologis Park Stoke. Less than a year later, all three parks are fully let and a build-to-suit deal has been agreed with existing occupier, Dunelm Mill for an extension on all the development land remaining at Prologis Park Stoke.
While the completion of all three parks is in itself significant – particularly during a recession – the most interesting question behind this achievement is how did this happen? Inevitably there is not one simple answer, but it would seem that three important aspects are; strategic locations, high quality buildings and sound customer relationships.
Working with the Customer
When Marks & Spencer decided to expand its Stoke-on-Trent operation, it needed to move quickly. Prologis could offer a new 382,000 sq ft vacant distribution centre at Prologis Park Stoke, but also because the company already had a good working relationship with Marks & Spencer it was able to complete the transaction within an exacting timescale. As Jason Keegan, head of general merchandise logistics at Marks & Spencer, said:
"Our relocation to a new site in Stoke-on-Trent will give us even greater flexibility and efficiency in our supply chain operations. Our ongoing relationship with Prologis enabled us to move quickly when the opportunity became available and we look forward to working with the company in Stoke-on-Trent."
This willingness to work with the customer's constraints can also be seen with the Dunelm extension, which is also at Prologis Park Stoke. Dunelm already occupies a 250,000 sq ft distribution centre and to accommodate its business growth, it decided to take a pre-let on a further 250,000 sq ft on an adjacent site. This new warehouse is being built on two neighbouring plots; the expansion land that Dunelm had previously acquired and the adjacent build-to-suit plot. The new building is connected to the original warehouse, but because Prologis has organised the construction work around Dunelm's operations, the original distribution centre can function as normal during the build programme.
Strategic Location
Like Marks & Spencer and Dunelm, other leading retailers have expanded during the recession. However, when searching for new buildings one of the most important criteria for each of these occupiers has been location. Since the Prologis parks at Stoke, Stafford and Coventry are close to the M6, easy accessibility has contributed to their success.
When Gap Direct, for example, concluded its search for a distribution centre from which to launch its online retail business in the UK, it chose the 230,347 sq ft facility at Prologis Park Stafford. For Gap, the deciding factor was the park's proximity to Junction 14 of the M6. As a spokesman for the company said:
"Location was paramount for the launch of our online operations and the distribution network is unbeatable at Prologis Park Stafford."
Gap signed an agreement to take the building in May 2010 and Prologis is currently fitting out the building so that it is ready for the start of operations in September. Location was also important for WWRD, the owner of the Waterford Crystal, Wedgwood and Royal Dolton brands, which has taken a 128,000 sq ft building at Prologis Park Stafford. Similarly, easy motorway connections were a priority for British Gas, which has taken the final speculative warehouse at Prologis Park Coventry.
High Quality Buildings
However, since British Gas has taken the 105,000 sq ft warehouse at Coventry for the distribution of smart meters and to expand its home insulation products division, it was also important that the building itself should meet strict environmental criteria. As Nigel Warwick, Group Head of Estates of Centrica plc, said:
"Smart meters and insulation will help our customers to cut their energy use and to reduce their carbon emissions so it is important that the distribution centre we use reflects this as well. The building’s EPC Grade 'A' and BREEAM 'Excellent' certifications were a big factor in us choosing this site."
The building's environmental credentials are the result of Prologis' decision to build distribution centres that operate as passively as possible. By implementing design measures, such as airtightness, insulation and intelligent lighting as a standard approach, Prologis minimises the need for energy. For the customer, these measures not only mean lower fuel bills, they also contribute to the customer's own climate change targets. The new Marks & Spencer's unit at Stoke, for example, also has BREEAM 'Excellent' accreditation and an EPC 'A' (CO2 index 25) rating and in line with Marks & Spencer's Plan A, the building will make a contribution towards the company's target of becoming carbon neutral by 2012.
In summary therefore, it would appear that strategic location, high quality buildings and solid customer relationships are a winning combination and even in a recession, this three-fold approach has brought Prologis notable success.
