JUAN JOSÉ VERA VILLAMAYOR

Spain 2021 | TRANSPORT | VIP INTERVIEW

TBY talks to Juan José Vera Villamayor, Managing Director of Montepino, about the foundation of the firm in Zaragoza, future projects, and the impact of the COVID-19 pandemic.

Montepino Logística, founded 20 years ago, holds more than 45% of sustained market share. How would you describe the evolution of Montepino?

Our company was founded by my father in Zaragoza in the early 2000s, and we are a real estate developer of industrial and logistic units. We started in the development business, and in 2010, we switched the business model to turnkey projects focused on renting. We seized on the crisis period to enter the Madrid market and consolidate ourselves. During the 2008 economic crisis, there was latent demand for unsatisfied logistics areas, which allowed for the development of the new and effective logistics that exists today. In 2014, we made the first large purchase of land in Spain since the recession hit: a 120,000-sqm plot of land in Corredor del Henares in the city of Torrejon de Ardoz. We were the first to promote a new logistics area since the 2008 crisis, and we sold that asset to a foreign investment fund. In December 2015, we again became the largest buyers of land through the purchase of 250,000sqm in the industrial area municipality of Cabanillas del Campo. There, we developed 170,000sqm of logistic land, rented out 100%, and sold it to Merlin Properties. That was a commercial success. Our next milestone was in 2017, when we established with CBRE a joint venture that is today Montepino. This is a JV between both companies to develop logistic infrastructure. Our entire portfolio is made up of assets developed from scratch. Now, in 2020, our assets are valued at EUR1 billion. We did not meet the goals of the business plan; we in fact surpassed those goals by almost tripling them. This success is due to the fact that we have developed new logistics infrastructure. There is a great deal of existing industrial units for logistics; however, that old infrastructure does not meet the needs of the current logistic sector. Instead, we focus on offering new products tailored to the current needs of the logistics sector.

Montepino recently made the final delivery of a new logistics operations center for Luís Simões in Guadalajara. What does this project mean for the company, and what are its main characteristics?

It was a challenge because Luís Simões required a complex project in which we had to develop three buildings, and it took us more than 2.5 years from start to finish because each building was handed over at different times. Meanwhile, Luís Simões wanted a completely automated project. The unit of Luís Simões in Guadalajara is a pilot project in itself. We implemented solutions that did not exist in other buildings in Spain. It has an automated warehouse with a picking area for e-commerce. It has successfully introduced all the different parts of the logistics process in a single industrial unit, all combined with a traditional warehouse. It is an extremely complex project in which we worked constantly alongside with its provider of automation services, because we had to adapt the construction to the pace of the automation. That was why the second building was handed over a year after the first was delivered. Montepino has a technical team of 32 workers doing logistics. The team does not do office buildings or malls, only logistics. Furthermore, our team is in-house, whereas our competitors have it as an outsourced service.

What other projects do you have in the pipeline?

Our portfolio will increase by 300,000sqm via the 12 projects that we have ongoing. Some two to three years ago, we realized our mix should focus on large-box projects on the outskirts of the largest cities and last-mile ones close to the center, combined with urban distribution centers. We have identified Málaga as one of the cities with latent demand. It has a large population alongside the Costa del Sol beach area, where many developers have developed asset classes. Logistic operators related to e-commerce in Málaga need to supply their products to that population, which is why we went to Málaga to develop a last-mile project that will be 100% commercialized before construction works begin. That has shown us that we can replicate that model in other cities. In Barcelona, we have five last-mile projects ongoing, and we will hand them over in the coming months. We are seeking new operations in Barcelona, as well as Valencia, Alicante, and the main transportation axis.

COVID-19 has affected many sectors of the economy. Real estate, due in part to the increase in the food and e-commerce sector, has managed to overcome the crisis. How has the pandemic impacted Montepino?

COVID-19 has been a huge challenge, though it has provided us with many growth opportunities. We have accelerated some latent projects that we were to hand over in 2022 and will now be handed over at the end of 2021 in order to meet our clients' needs. COVID-19 had a shock that lasted for some weeks; however, we only stopped operations for the 15 days when the country was in a lockdown. After that, we continued to operate. As a matter of fact, we accelerated our construction projects, and all of them will be handed over before deadline. Meanwhile, in terms of business, COVID-19 has pushed our operations forward. All our buildings are extremely efficient for modern logistics, including automation processes for e-commerce. All our buildings were 100% operational during the pandemic. Modern buildings operate well, because they have adequate spaces for workers and have the capacity to resolve the problems that COVID-19 generated. Meanwhile, the demand for e-commerce has also increased during the pandemic. In six months, we completed all the stages that we were to complete within three years. That is the positive demand for new packaging, materials, and stock. In that regard, the impact has been positive.

There has been an increase in urban logistics centers, which allow for last-mile distribution. How much will your last-mile portfolio increase?

It is difficult to talk about percentages in last-mile and big-box projects. All the last-mile projects are from 4,000-6,000sqm. The concept of last mile for urban areas has to be understood in the sense of cities like London and Paris. These cities are huge, so the last-mile concept works perfectly for urban areas. However, in Madrid one can reach many different areas in a question of 20 minutes, and while you are driving, you go through many municipalities where industrial spaces exist. Therefore, the penetration of last mile in Spain has yet to occur in those industrial spaces within cities. However, of the 12 projects that we currently have, eight are last mile. Last mile has historically been a challenge for developers. When developing such projects, which are surgery-type, the investment volume is tiny, and large investment funds, including Spanish SOCIMIs, have always ruled them out due to the small sizes of the operations. That has been a competitive advantage for Montepino, because we have done last-mile investments in order to meet the demands of clients. Our total investment in last mile is more than EUR100 million. We see opportunities for big boxes in the outskirts and last-mile projects.