REVIEW
THE MAGAZINE OF PROLOGIS UK
WINTER 2014
INVESTING
IN THE FUTURE
01
WINTER 2014
04
07
04PROLOGIS EXPANDS IN LONDON
AND THE SOUTH EAST
uilding an investment portfolio;
B
new sites and developments
07 GROUND BREAKING UPDATE
08
rologis celebrates the start of
P
four new developments
08 FUTURE-PROOF LOGISTICS
onsolidation and rail freight are two
C
ways that companies can future-proof
their businesses
10 NOT JUST BUILDINGS
Prologis takes on a complex
infrastructure challenge
14
JAGUAR LAND ROVER ROARS
INTO RYTON
10
JLR takes a 225,000 sq ft unit
at the park for its Special Vehicles Operations Technical Centre
18 EFFICIENCY BY DESIGN
New building design for
fast-moving companies
14
22
02
PROLOGIS REVIEW
18
22
BEE HAPPY
Prologis looks after the bees
24 PROLOGIS 100 CYCLE CHALLENGE
Helping to raise money for charity
24
INVESTING IN THE FUTURE
O
ver the past year, Prologis
has acquired both land and
investment properties; we
have also established a strong
development pipeline, which
includes six speculative facilities
in prime distribution markets.
This intense level of activity clearly
demands high levels of funding
and, since Prologis does not seek
external sources of finance, we
are regularly asked what factors
influence our investment decisions;
what as investors, we are looking
for in the shed spaces of today
and tomorrow.
AWARDS
FOCUS
The answer is straightforward: we are seeking
to meet – and anticipate - our customers’
requirements. To do this, we seek longevity;
locations and facilities that will be as relevant to
occupiers in 20 years’ time as they are today.
For this reason, we invest in prime distribution
markets; the East and West Midlands together
with London and the South East. One of the
main property requirements for many of our
customers is the best possible access to the
main UK centres of population. These customers
often need sites in the Golden Triangle,
where they are at the heart of the road and
rail networks. Also, they need sites in London
and the South East area, which is the largest
consumer market in Europe.
Most of the buildings that we hold in our UK
portfolio are based on a generic design that
can be adapted to suit different occupiers’
requirements over the lifespan of the facility.
However, we are constantly evolving our base
building design and to do this, we need to be
able to predict what occupiers will need from
their logistics space in the future.
In this issue of Prologis Review we offer an
insight into the ways we are investing to
meet our customers’ evolving needs. In the
process, we aim to provide the best possible
opportunities in the UK market, both now and
in the future.
Andrew Griffiths
Managing Director & Regional Head UK
As well as prime locations, customers need high
quality, cost-effective buildings. The buildings
we develop either directly for customers or
speculatively are all designed and constructed
to the same high standards. Similarly, when we
acquire property, the quality of the units – as well
as the location of the site - is a deciding factor.
Prologis has been named Developer of the Year at the
IAS Awards 2014, which were held in London on 25
September. Voted for by the membership of the Industrial
Agents’ Society, the award recognises the Prologis team’s
achievements in driving the UK market.
For the second year running, Prologis has won West
Midlands Industrial Deal of the Year at the CoStar Awards.
The 2014 award is for the letting of 258,000 sq ft to Euro
Car Parts at Prologis Tamworth.
03
WINTER 2014
A number of existing and
“ potential
customers have
requirements for the Heathrow
area and there is very little
supply, so we are working hard
to develop new opportunities.
04
PROLOGIS REVIEW
”
PROLOGIS EXPANDS
IN LONDON
AND THE
SOUTH EAST
M
any people in the industrial sector associate
Prologis with the Golden Triangle; the big
strategic distribution locations in the East
and West Midlands. However, while it is true that
many of the company’s sites are in the centre of the
country, it is also expanding its land and property
portfolios across London and the South East.
As Paul Weston, senior vice president at Prologis explains: “Sites such
as Prologis Park Heathrow – where we are developing the final phase
speculatively – have been a great success and we are now seeking to
build our land bank and consolidate our investments across the region.”
05
WINTER 2014
Building an Investment Portfolio
In 2013, Prologis European Logistics Partners (PELP)
acquired a 2.5 million sq ft industrial portfolio from
LondonMetric Property. The main attraction of this deal
was that eight of the 11 properties are in key London
and South East locations. Further, most of the units
had originally been developed by Prologis, so it had the
comfort of knowing that these were high quality facilities.
Building on the LondonMetric acquisition, Prologis
completed three further investment transactions for
approximately 1.1 million sq ft during the summer of
2014. The first of these deals was at Colnbrook near
Heathrow, where the company bought a fully let terrace
of four units totalling 171,500 sq ft. Then, focussing
on the distribution heartland of North London, it signed
agreements for two regional distribution centres close
to the M25. At Innova Park in Enfield, Prologis acquired
the 246,000 sq ft Iceland Foods unit and then at Waltham
Cross, it secured the purpose-built 705,000 sq ft
Sainsbury’s facility.
New Sites and New Developments
The investment transactions, however, have been only
one strand of Prologis’ activity in London and the South
East, where it has also been building a sustainable
development pipeline. Early in 2014, the company
signed a joint venture agreement with DP World to
develop a 316,000 sq ft unit speculatively at the London
Gateway Logistics Park and during the summer, it
completed a 310,339 sq ft speculative building at
Prologis Park Dunstable.
The two speculative units – of 102,900 sq ft and
36,270 sq ft – at Prologis Park Heathrow will complete
in November and since a number of existing and potential
customers have requirements for the Heathrow area,
Prologis is working hard to develop new opportunities.
So far, this initiative is going well. On Dawley Road in
Hayes, where Prologis already owns two distribution
centres, it acquired Venturis Park, a 6.5 acre site that
is ideal for a small unit scheme. With Cedarwood as
development manager, Prologis is now putting together
a planning application for a 115,000 sq ft scheme that
will include units from 5,000 sq ft to 50,000 sq ft.
01
Shortly after securing Venturis Park, Prologis acquired
a 30 acre site next to Stockley Park in Hayes. Again,
the company is working on a planning application,
which it expects to submit to Hillingdon Borough
Council in early 2015.
“We are making good progress,” continues Paul Weston.
“With the speculative buildings at Prologis Park Heathrow
and the two new development sites in Hayes, we will
soon be in a position to offer customers a wide range of
facilities, all of which will be close to the M4 and the M25
and all within two miles of Heathrow Airport.”
02
06
PROLOGIS REVIEW
Image: HiOptic Photography
GROUND BREAKING
UPDATE
Prologis Park Heathrow
At Prologis Park Heathrow (shown
below), Councillor Catherine Dann and
Mrs Rita Kilroy, Mayor and Mayoress of
Hillingdon visited the site to celebrate
the start of construction work on two
speculative buildings that will provide
102,900 sq ft and 36,270 sq ft of
logistics space.
The Bridge Dartford
Construction work has started
on the new 122,500 sq ft headquarters
for high technology manufacturing
company SEM at The Bridge in
Dartford. Jeremy Kite, Leader of
Dartford Borough Council joined
the project team and Michael Laming,
CEO of SEM to welcome the company
to Dartford.
Prologis Littlebrook
Gareth Johnson, MP for Dartford joined
the directors of Europa Worldwide
Logistics along with Paul Weston and
Jamie West from Prologis to mark
the start of work on Europa’s new
262,500 sq ft headquarters building and
Southern hub.
01 Prologis Park Dunstable, DC1
02 DP World at London Gateway
03 Prologis Park Heathrow
within two miles of Heathrow Airport
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07
WINTER 2014
Consolidation and
“
rail freight are two ways that
companies can future-proof
their businesses and at
DIRFT III Prologis can offer
that potential.
”
TAKES FINAL PLOT AT
PROLOGIS RFI DIRFT II
Prologis is developing a 420,000 sq ft
rail-connected distribution centre for
Eddie Stobart, a leading UK multimodal
logistics operator, on the final plot at
DIRFT II.
The site is close to the M1 motorway
and adjacent to the West Coast Mainline.
The new facility will have a dedicated
canopied rail platform that will be
installed along one side of the building.
This combined road and rail connectivity
will allow Eddie Stobart to operate with
maximum efficiency and to grow its
share of the rail freight sector.
“We already occupy a number of
buildings at DIRFT and we know that it
is an excellent location for many of our
customers,” said William Stobart, CEO
of Eddie Stobart. “This new building
will further our rail capability and it is a
significant investment in the continuing
success of our business.”
The new building has been designed
to achieve BREEAM ‘excellent’
accreditation and an EPC ‘A’ rating.
Construction work will start on site in
November and the building will complete
in summer 2015.
This is the first building we have let
to Eddie Stobart and we are delighted
that we have been able to meet the
company’s requirements.” said Andrew
Griffiths, managing director of Prologis
UK “DIRFT II is now complete, but with
our ongoing investment in DIRFT III, we
can continue to offer our customers the
best opportunities in the market for railserved distribution facilities.”
01 Rail-served Tesco unit at DIRFT II
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PROLOGIS REVIEW
FUTURE-PROOF
LOGISTICS
T
he continued rise in the price of fuel - particularly diesel - is one of the main
problems confronting any company involved with the distribution of goods.
It is unlikely that logistics companies will ever be able to influence fuel prices,
but recent developments in the distribution property market are providing a way to
control or mitigate the impact of fuel costs.
Among retailers and other logistics operators, there is
a growing trend towards consolidation; bringing goods
together into one large facility. It is even possible that
different companies - including competitors – would
consider sharing both transport and distribution
space. This would mean fewer empty trucks on the
road and, if the new distribution hub is within easy
reach of the main areas of population, journey times
could be minimised. Both of these factors will help to
reduce fuel costs, but if the facility is rail-connected a
significant proportion of these costs would be mitigated
altogether. Goods can be brought to the distribution
centre from the ports by rail and then transported
around the country by freight train.
Over the past few years, with the development of the
second phase of the Daventry International Rail Freight
Terminal (DIRFT), the move towards rail freight in the
logistics sector has started to gather momentum, with
the supermarkets - Tesco and Sainsbury’s - leading the
way. Then in July this year, the Secretary of State for
Transport granted a Development Consent Order (DCO)
for 8 million sq ft of rail-linked distribution space at
the next phase, which is known as DIRFT III.
Since the announcement of the DCO, Prologis has
been pleasantly surprised at the level of interest that
DIRFT III has attracted. One emerging trend is that
occupiers who are looking for large format buildings are
keen to understand the benefits of transporting goods
by rail; the opportunity for this seems to be greater for
larger buildings. Although each potential customer has
its own priorities, in every case companies are seeking
to drive efficiencies through their supply chains and
DIRFT III could offer an ideal solution.
“DIRFT is located at the centre of the country and it
is one of the very few sites within the Golden Triangle
that has planning permission for large footprint buildings
of over 1 million sq ft,” says Robin Woodbridge.
“The site is next to the M1 motorway, but one of its
main attractions is that it already has trains running to
multiple destinations. Occupiers coming to DIRFT are
not pioneers trying to establish new routes, they are
using a tried and tested solution.”
Another benefit of using the rail network to transport
goods is that soon all the main freight routes will be
electrified. As Robin Woodbridge points out, this will
provide customers with a further ‘hedge’ against
the rising cost of diesel because electricity can be
generated from non-fossil fuel sources such
as renewables.
Consolidation and rail freight are two ways that
companies can future-proof their businesses and at
DIRFT III Prologis can offer that potential.
09
WINTER 2014
NOT JUST BUILDINGS
10
PROLOGIS REVIEW
W
hen thinking about new
distribution centres, not many
people stop to consider the
design and construction of the
associated transport infrastructure.
However, at all Prologis developments,
access to, from and around the site is
just as important as are the buildings
themselves. At each park, the extent of
the infrastructure works varies, but at
Prologis RFI DIRFT II the company faced
a particularly complex challenge.
Image: HiOptic Photography
The new Sainsbury’s 1 million sq ft distribution centre
that is under construction at the site is on the opposite
side of the A428 to much of the existing DIRFT
development. Since the building will be rail-connected,
with its own intermodal facility, Prologis needed to
extend the existing freight line that comes through
DIRFT - linking the development to the Northampton
loop of the West Coast Main Line – and take it over the
A428 to a railhead beside the new distribution centre.
WINTER 2014
are surprised that
“theVisitors
new railway line lies on a
9 metre high embankment.
”
012
12
PROLOGIS REVIEW
01 Construction of the new Sainsbury’s unit
at DIRFT II
02 The stone finish embankment
03 Railway bridge over the A428
04 Scope of the embankment against the
1 million sq ft Sainsbury’s unit
03
Why so High?
When visitors first come to the
Prologis RFI DIRFT II site, they are
surprised that the new railway line lies
on a 9 metre high embankment even
though the surrounding land is relatively
flat. However, the embankment is
essential for several reasons, the first
of which is that the railway line has
to cross the A428 on a bridge that is
sufficiently high for large vehicles to
pass underneath. The same railway line
will also serve DIRFT III, which means
that it will need to cross another bridge
over the A5 to reach the new site.
The embankment, which runs for
800 metres along the western
boundary of the DIRFT II site, will
also support Sainsbury’s intermodal
facility – a 400 metres long by 30
metres wide concrete slab where
goods will be unloaded from the rail
sidings either directly onto trucks or
into the warehouse for storage. In
addition, the embankment will act as
an environmental bund, providing an
acoustic and visual barrier between the
distribution centre and the proposed
residential development that will be built
on the neighbouring site.
Because the embankment will carry
the railway line to DIRFT III, it has been
designed to carry four lines of track; two
will stop at the Sainsbury’s depot, while
the other two will carry on through the
site, over the A5 and eventually into
DIRFT III.
The overall size of the embankment
presented some unusual design
and construction challenges, as
Mark Shepherd, vice president at
Prologis explains: “We did not have
room on the site to build a freestanding
embankment with conventional battered
slopes and it was clear that we would
need to build retaining walls and adopt
a range of geotechnical solutions to
support the structure. However, the
situation was complex and it took about
eight months of working closely with
the main contractor and with the supply
chain before we could finalise the
embankment design.”
04
Reinforcing the Earth
After evaluating the different options,
the team realised that the most
effective solution would be to divide
the embankment into sections and
to build the steeper slopes with earth
reinforced by layers of geotextile.
To give the slopes facing the
Sainsbury’s facility an attractive
stone finish, the structure has been
covered by a steel mesh, lined with
a geosynthetic layer and filled with
re-cycled crushed concrete recovered
from the site. On the opposite side
of the embankment, the geotextile
layers, which include topsoil, will be
seeded with a wildflower mix designed
to attract bees as part of the site’s
landscaping. An extensive tree planting
scheme is proposed along the bund
with a footpath and cycleway network
to create an attractive amenity area for
the local community.
“The design and construction of this
embankment has been complex, but it
is working well,” says Mark Shepherd.
“The rail tracks are next to be installed
and we are progressing on schedule
with the Sainsbury’s intermodal facility.
Looking ahead, we are in an excellent
position to further extend the railway
connection into DIRFT III.”
13
02
WINTER 2014
JAGUAR
LAND ROVER
ROARS INTO
RYTON
I
f employment parks have a life cycle, it has taken a
remarkably short time for Prologis Park Ryton to come full
circle. In 2007, PSA Peugeot Citroen closed its Peugeot 206
assembly plant on the Ryton site, which Prologis acquired
in 2008. Then in 2014, following a series of deals with
companies such as Network Rail, Hi Logistics and UK Mail,
Prologis announced that Jaguar Land Rover (JLR) would be
taking a 225,000 sq ft unit at the park for its Special Vehicles
Operations Technical Centre. In just seven years, motor
manufacturing has come home to Ryton.
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PROLOGIS REVIEW
15
WINTER 2014
01 The Jaguar F-TYPE Project 7
02 Prologis Park Ryton, DC3
Part of JLR’s recently created Special Operations
division, the new Technical Centre will produce
luxury commissions and extreme performance
vehicles. The company is investing
£20 million in the fit-out, which will include a
VIP commissioning suite for bespoke services,
as well as flexible workshops that have been
inspired by Formula 1 manufacturing facilities.
“We are excited by the capability and potential
that this new facility will give us,” says John
Edwards, managing director of Jaguar Land
Rover Special Operations. “We will be creating
truly iconic vehicles that reinforce the global
reputation of both Jaguar and Land Rover brands
as we expand our product portfolio and fulfil our
ambitious plans.”
Close to JLR’s manufacturing facilities as
well as to its engineering, design and testing
operations at Whitley and Gaydon as well as to
the new Jaguar Heritage workshop at Browns
Lane, Coventry, Ryton is an ideal location for the
Technical Centre.
The first vehicle to roll out of the new workshop
- the Jaguar F-Type Project 7 is a good example
of the way in which the different JLR sites
work together. The F-Type Project 7, which is
the fastest and most powerful Jaguar to date,
will start life at the company’s plant at Castle
Bromwich. The cars will then be transferred to
the Ryton facility, where a team of specialists will
complete the build by hand.
“We are delighted that Jaguar Land Rover has
decided to establish its new Special Vehicles
Operations Technical Centre at Ryton,” says Alan
Sarjant, senior vice president at Prologis.
“The company is bringing around 150 engineering
and other highly skilled operational jobs to Ryton
– 100 of which are new – so this is very good
news for the local area.”
SUSTAINABILITY
EVENT
AT RYTON
16
PROLOGIS REVIEW
Occupiers, local stakeholders and
members of the supply chain joined
Prologis, Planet First and Cool Earth at
Prologis Park Ryton to celebrate the
sustainability achievements across the
site. Each of the four completed buildings,
which have all gained BREEAM ‘very
good’ accreditation and an EPC ‘A’ rating,
have also been awarded the Planet Mark.
02
We will be
“creating
truly
iconic vehicles that
reinforce the global
reputation of both
Jaguar and Land
Rover brands.
”
17
WINTER 2014
18
PROLOGIS REVIEW
EFFICIENCY
BY DESIGN
I
n a world where people expect to be able to buy what they want, where,
when and how they want it, retailers are facing some complex logistics
challenges. While the details of each individual operation may differ, the
overall principle is often the same; product velocity. In other words, moving
goods through the supply chain to meet customer expectations as quickly
and efficiently as possible.
While these demanding delivery schedules are driving fundamental changes through the sector; they are
also influencing building design. Traditionally, Prologis distribution centres are designed on a 2:1 ratio,
but the company is finding that some customers – particularly those in the e-commerce sector – want
buildings that reflect the latest demands of product velocity.
01
19
WINTER 2014
Prologis UK Parameters - indicative 300,000 sq ft unit
of
“thisThenewbenefit
design
is that although
it is single-sided,
it has as many
loading doors as
a cross-docked
facility.
”
50%
WC
Acc.
WC
0000 GFL OFFICES
Brise soleil above
more loading doors
20
PROLOGIS REVIEW
Long, Narrow Buildings
Drawing on the company’s global
experience, Prologis UK has developed
a new format that effectively stretches
the floorplate to deliver a single-sided
building that is longer and narrower than
a traditional Prologis unit. Designed on a
ratio of about 2.6:1, these new facilities
offer 50% more loading doors than a
traditional single-sided building.
“The benefit of this new design is that
although single-sided, it has as many
loading doors as a cross-docked facility,”
says Maurice Dalton, senior vice
president at Prologis. “The layout is ideal
for fast-moving operations, where goods
are received at one end of the building
and then sent out at the other.”
FE
Stairs
Kitchenette
F WC
Acc
WC
Draught Lobby
(with sliding doors)
M WC
Lift
FE
Cleaner's
cupboard
Lift cabinet
under stairs
Stairs
02
55m
More Car Parking and Deeper Yards
Another advantage of the new building
design is that it leaves more external
space for increased car parking –
often an important requirement for
e-commerce operators - or for longer
yards. The new single-sided Eddie
Stobart facility at DIRFT II, for example,
will have a 55 metre deep yard.
One of the main reasons that occupiers
need larger yards is to accommodate the
increasing use of double deck trailers
and the scissor lifts that are required
for loading and unloading the trailers.
Because external scissor lift pods take
up yard space, they can reduce the
amount of room that the trailers have to
manoeuvre within a traditional 50 metre
deep yard. To overcome this problem,
Prologis is increasing yard depths from
50 metres up to 55-60 metres.
01 Amazon at Prologis Park
Tracy, California
02 Prologis Park Dunstable, DC1
“The logistics sector is developing very
quickly,” concludes Maurice Dalton.
“But our global perspective gives us
a useful insight into the way the UK
market is likely to move and we are
confident that our buildings will be just
as relevant in 15 to 20 years’ time as
they are now.”
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WINTER 2014
Bee
HAPPY
A
lthough Prologis has a reputation as a
developer of highly sustainable industrial and
logistics buildings, it had never made special
provision for bees until it started to design the
landscaping around the new Sainsbury’s distribution
hub at Prologis RFI DIRFT II.
Building on the success of Sainsbury’s ‘Operation Bumblebee’ and the
subsequent work installing bee hotels and bee cafes at stores across
the country, the Prologis team has been working with Robin Dean,
Sainsbury’s bee expert, to make the area surrounding the new facility
as bee-friendly as possible.
Robin advised that the team should focus on bumblebees and solitary
bees, which as he points out, are essential for pollination and yet are in a
“vortex of decline”. Modern farming methods are making the wildflower
species that the bees depend on for forage extinct, while the wide scale
removal of hedgerows is helping to destroy their natural nesting sites.
This decline in sources of food and shelter are the two central issues that
‘Operation Bumblebee’ and the stores project are aiming to address; they
are also the driving force behind the landscape design at the new DIRFT II
distribution hub.
22
PROLOGIS REVIEW
01-03 Crab Apple, Wild Red Clover and
Greenfinches are amongst many species
that will attract wildlife to DIRFT II
04 The railway bund under construction
Creating a Bee-Friendly Habitat
Bumblebees and solitary bees have different nesting
behaviours and Prologis will provide the best possible
conditions for both. For bumblebees, which tend to
nest communally both above and underground, the
company will install 14 nesting boxes, some of which
will be underground and some above ground in quiet,
shady areas that are unlikely to be disturbed. Solitary
bees, as their name suggests, make individual nest
cells for their larvae, using small tunnels or holes in
dead wood, crumbling stone or the hollow stems of
dead plants. So, for these bees, the team will create
areas of rubble and build piles of logs, both of which
will offer attractive nesting sites.
02
At the western edge of the site, along the bund that will
support the railway tracks, Prologis will plant a continuous
woodland corridor. This will include native species,
such as Bird Cherry (Prunus padus), Field Maple (Acer
campestre) and Crab Apple (Malus sylvestris), all of which
provide both forage and potential nesting sites.
Across the site, the team will sow wildflower
seed - with different mixes designed to suit the
various ground conditions. But, in every case, the
wildflowers have been chosen to provide the best
possible forage for the bees. Next summer, the area
around the new distribution hub will be a riot of colour
with flowers such as Cowslip (Primula veris), Red
Campion (Silene dioica) and Meadowsweet (Filipendula
ulmaria), Wild Red Clover (Trifolium pratense) and
Meadow Buttercup (Ranunculus acris).
03
Needless to say, an environment that will attract bees,
will also encourage biodiversity generally across the site.
To take just one example, the Crab Apple trees that
will be planted along the bund will attract the bees in
the spring with their blossom. Later in the year,
birds – particularly robins, starlings, greenfinches
and thrushes – will feed on the fruit, while all year
round, the trees could potentially be a home for over
90 species of insects – including the bees.
For Prologis, this is already proving to be a fascinating
project and although the Sainsbury’s distribution hub at
DIRFT II is its first encounter with bees, it probably will
not be the last.
Next summer, the area
“
around the new distribution
hub will be a riot of colour
with flowers.
”
04
23
WINTER 2014
01
AND FINALLY...
PROLOGIS 100 CYCLE CHALLENGE
RAISING
£26,000
After four years of long distance rides
across the Continent (London to Paris;
Paris to Geneva; Geneva to Nice
and Nice to Carcassone), Prologis
decided to set this year’s Cycle
Challenge in the Cotswolds.
Having cycled either 100 miles or
100 kilometres, over 100 riders reached
the finish at The Farncombe Estate,
Broadway to celebrate raising more
than £26,000 for a range of charities,
including Macmillan Cancer Support.
24
PROLOGIS REVIEW
PUBLIC ART
FOR
SCOTLAND
Prologis’ most recent public art
installation is at the M8 site near
Glasgow, close to the new Brake
Brothers distribution centre. Called
‘Natural Cycle’, the artwork has been
created by sculptor Will Jordan.