The Four Food Groups – October 2008

Four Food Groups 2008-10-01 Staff Writer <strong><bold>INDUSTRIAL<br /> Warehouse full of yen</bold></strong><br /> Logistics property trust ProLogis has a yen to stretch its boundaries. The Denver-based industrial property developer is looking to invest ¥450 billion (€2

Warehouse full of yen

Logistics property trust ProLogis has a yen to stretch its boundaries. The Denver-based industrial property developer is looking to invest ¥450 billion (€2.8 billon; $3.9 billion) in Japan over the next two years, according to Reuters, bringing its total investment in the country to ¥900 billion by the end of 2009. The move builds upon the firm’s ongoing strategy in Japan. The company currently operates 69 warehouses totaling 3.4 million square meters of floor space throughout the country from Hokkaido to Kyushu. Metropolitan Tokyo is the world’s largest distribution market, according to the firm. Limited supply in Japan—attributed to a scarcity of modern, efficient facilities and few specialized competitors—also lends itself to good investment opportunities. Meanwhile, demand, including inbound and outbound port growth and growing domestic consumption, are also relevant factors. ProLogis has two funds targeting Japan worth more than ¥320 billion, the first of which it launched in 2002. Both funds are partnerships with GIC Real Estate, the government of Singapore’s real estate investment arm. In August, the developer launched four new global property funds targeting Europe, Mexico, South Korea and the US with a combined purchasing power of more than $14 billion. “Together with the capacity in Prologis’ existing funds, we now have fund agreements in place to support $33 billion of assets under management in funds—more than double the $14.2 billion of assets under management at the end of the second quarter,” Jeffrey Schwartz, ProLogis chairman and chief executive officer, said at the time.

Defending the homeland

In a newly formed public-private partnership, the US Army and East Army Properties have come together to finance, construct, renovate and operate approximately 1,590 military family homes at Fort Lee in Prince George County, Virginia. Using approximately $260 million (€188 million) in private debt and equity over the next four years, the partnership will construct 748 new energy-efficient homes and renovate 112 existing homes on the military base. The new three- and four-bedroom homes feature amenities like two-car garages, modern kitchens and ceramic-tiled entry foyers, according to the partnership, while a 3,770-square-foot community and three customer service satellite offices will be built within the neighborhoods. The East Army Properties team is a development consortium comprised of Hunt Development Group in El Paso, Texas; real estate management company Pinnacle in Seattle; and Falcon Properties in Plymouth Meeting, Pennsylvania. Construction is slated to begin immediately and the first new homes will be presented to military members and their families in the fall of 2008.

Freeze-up in London?

The robust office sector in central London might be hitting the brakes according to one senior real estate investment banker. Robert Fowlds of JP Morgan Cazenove said that if major financial groups scale back operations because of global market tremors, the slowdown could also be felt in the City’s office market, Reuters has reported. “We can’t duck these issues,” Fowlds told the gathering of the European Public Real Estate Association in Athens in September. “Banks will think twice about taking on a 200,000-or 300,000-square-foot letting.” Fowlds predicted that banks were not bringing on new employees in light of market turbulence over the summer. “Getting someone from the financial services industry to sign on the dotted line is going to be very hard,” he said. The predication came after a strong six months for the London office market as a whole. In August, Cushman and Wakefield reported that West End office rents jumped by 50 percent for the first half of the year because of increased demand. Rents in the area were nearly double those of the City, which commands around £65 per square foot a year.

Malls wanted

India may have to wait for its fashionista makeover. International apparel retailer Giordano International has delayed the launch of its new stores in the country by several months because of a dearth in available retail space, according to local press reports. “We had booked 25 properties in various malls across the country, which were supposed to open by the year-end,” Giordano International chairman Peter Lau said. “But these malls are yet to come up.” With the push into India, Giordano is planning to launch new “Giordano Concept” stores with 2,000 to 5,000 square feet of floor space, up from the 1,500 square feet found in its stores currently. The label is also looking to introduce more European fashion into its clothing line. The fashion retailer has two stores in Chennai and one in Hyderabad. The chain, which hopes to open 20 to 25 stores in the country in the next three years, currently has plans for outlets in the cities of Mumbai, Hyderabad, Pune, Bangalore, Chennai and New Delhi. “We have 800 stores in China,” said Lau. “I am sure India will also have some very good growth opportunities for Giordano.”