Room to boom in Benelux

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Asking a logistics space developer in the Benelux region for a quote on a building is a bit like talking to a Chelsea fan watching a London derby about England’s chances in the Ashes. The developer will admit politely that your request is very interesting but there’s something else going on just now that’s more interesting.

Stock is now more important than space for logistics developer executives. The money that goes into the pockets of developers active in the Benelux region next year is as likely to come from IPOs and other share placements as from dull old lettings.

ProLogis European Properties (PEPR)’s IPO was the biggest of these, as the Denver-based developer and landlord offloaded 58.3 million sq ft (5.4m sq m) of warehouses on to investors. And they lapped it up. ProLogis made around £1.8 billion on that September morning.

ProLogis is not the only one. Kenmore has started spending the £140m proceeds of its European Industrial Fund, launched on the London Stock Exchange in September, with the acquisition of seven properties across Europe. Among them, it paid £11.9m for a 333,684 sq ft (31,000 sq m) warehouse scheme to the north east of Brussels, giving a net initial yield of 7.42 per cent.

Current tenants include Tyco, Distri-Log and Black & Decker, the latter of which uses the property as a distribution hub for the Benelux region. And Kenmore has another £108m to spend in France, Belgium and the Netherlands thanks to a four-year facility from Royal Bank of Scotland.

The former heads of Ashtenne and Industrious, Morgan Jones and Ian Watson, are buying hard via their new investment vehicle Hansteen. It raised £125m in a three-times oversubscribed issue on AIM. Among purchases since, it paid £2.3m for a 19,000 sq ft (1,757 sq m) warehouse building on a 0.6-acre (2,500 sq m) site in Amersfoort. Some 60 per cent of the building is let to four tenants with a current rent roll of £107,000 a year, the balance is currently vacant. The property will have a rental value of approximately £208,000 a year when fully let. Hansteen was represented by Statement.

Fortis Real Estate has taken over V&V Handling whose main assets are two logistics properties located at Boortmeerbeek and Kampenhout in Belgium. The properties comprise some 260,000 sq ft (24,000 sq m) and are both let to consumer goods company Henkel, which carries out its logistical activities in the Benelux countries. The sites are located in the industrial areas of Boortmeerbeek and Kampenhout along the N26, an important logistical axis in Belgium. The value of V&V Handling shares is based on a market value of its main assets of approximately £7.7m. King Sturge advised the seller in this transaction.

All this activity comes in part because of a profound belief among property people in the strength and safety of the Benelux market – but also because UK property and land prices are seen to be high and so the market played out. Many of these euro-friendly property people, who originate from the UK, agree it is natural to move the relatively short distance across the North Sea and open up shop on first landfall on the Continent.

There is so much room to build, compared to the UK. Schiphol Real Estate’s Cargo Building 9 at CargoWorld, Schiphol Southeast, is a 265,000 sq ft (24,600 sq m) cargo transit warehouse with 42,000 sq ft (3,900 sq m) of office space. It is located alongside the apron of one of Amsterdam Airport Schiphol’s main runways, runway 06-24. You couldn’t get a building that size within half a mile of Heathrow.

Menzies Aviation and Skylink, two large air cargo handlers, will lease 75 per cent of the new building. Menzies Aviation handles around 430,000 tonnes of air cargo at Amsterdam Airport Schiphol on an annual basis. Skylink is currently situated at Schiphol South and handles some 71,000 tonnes of air cargo annually.

Of the three constituents of Benelux, the Netherlands is where everyone wants to be. Belgium has seen a wobblier rental rise in recent years – and Luxembourg is too crowded. According to King Sturge, the complete cost of rent, local taxes and service charges comes to £64 per sq m in Luxembourg, £47 in Amsterdam and Rotterdam, £38 in Brussels and £34.60 in Antwerp.

There is confidence in Belgium for the future, however. Kuehne & Nagel has opened a new logistics centre in the Flemish town of Geel.

Located on a 25-acre (100,000 sq m) plot in Geel Punt Industrial Park, it includes 484,000 sq ft (45,000 sq m) of warehouse space are efficiently use by a high-bay storage systems offering 50,000 pallet positions and include 129,000 sq ft (12,000 sq m) for the provision of value-added services. In a next phase of construction, warehouse space can be extended to a total 807,000 sq ft.

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