OSCAR HERAS

Spain 2021 | TRANSPORT | VIP INTERVIEW

TBY talks to Oscar Heras, Country Director Spain of Global Logistics Properties (GLP), about the Spanish market, assets across Europe, and the importance of local manufacturing during times of global crises.

GLP Spain Management started operations a little over a year ago, but it was already in the Spanish market before, under the Gazeley brand. Can you elaborate on the presence of Gazeley in Spain and the acquisition by GLP?

GLP is a Global company that is focused on real estate for logistics. We started our activities in Spain in 2002 with developments in Madrid and Zaragoza, having a profile of a trader developer back then. We are known as a company that has an excellent customer service. GLP is present in Asia and the US, and we are also present and market leaders in Brazil and India. Europe was the piece that was missing, so GLP acquired Gazeley in 2018. We retained the name of the brand for two years to demonstrate our clients that nothing would change, and we have continued to demonstrate that our customer service experience continues to be the best in the market. We have reinforced our position in Europe by the acquisition of Goodman Eastern and Central Europe , which allows us to have a presence on those markets. Currently, GLP is present in 12 markets in Europe. We have offices in the biggest Markets,we are a global business with a local approach.

How many assets do you have in Europe, and what is the importance of Spain in your portfolio?

Gazeley in the past was a company that systematically traded their assets. In 2016, we sold all our assets in Spain and Italy. As a result, most of our presence was in Germany, the UK, and France. Now, since 2018, we are developing a strong investment strategy to diversify our portfolio. The strategic plan is to grow in promotion by promoting our own products or the acquisition of buildings. We are long-term investors not traders. We have not acquired a portfolio in Spain yet, though it is something that we are looking at, and we will invest when the opportunity arises. We will not invest at extremely high prices.. We continue to look at opportunities in Spain, but we will not invest if we do not see a solid opportunity. In Europe, we have around 4,5 million sqm of assets under management, and in Spain we have 140,000sqm of finished buildings and a land bank of 600,000sqm. We have presence in Madrid, Castilla la Mancha , Catalonia, and Valencia, and we plan to develop in the markets of Andalucia and Euskadi. We will alternate big projects in strategic logistic locations, such as the municipality of Illescas the city of Guadalajara and prime areas like a project in Villaverde near Madrid and others in Prime areas of Barcelona market.

GLP operates in an attractive, profitable, and also competitive sector. What is GLP's differentiating strategy with respect to its competitors?

We are long-term investors, not opportunists. We see several investments in the market at this moment that are moving in short-term operations and many aggressive trading operations. There is currently risk in some real estate balances that project rapid increase of the rents, which is extremely dangerous. The margins of our clients cannot afford very high rent increases, and some balances are projected very high increases in the revenues.. We have been in this market for 30 years and if we invest, we are doing it based on a fundamental analysis that tells us if the investment is resilient and resistant to cycles. Each organization is very respectable, but we should not forget the essence of the business, the warehouse, and be careful on investments guided by an Excel spreadsheet.

GLP has closed the rental of its first warehouse in Spain to DHL Supply Chain, which will manage the logistics of the European Zalando fashion platform in Spain. What does this project entail for the company, and what are its main characteristics?

It is an important project for us that shows that quality is paramount to GLP. We talk about one of the best warehouses in Spain, which is one of the reasons why our clients decided to join this project. This project shows the essence of our business, which is our outstanding customer service and quality. The agreement was almost closed in March and has continued despite the pandemic. Another significant project during this past year was the acquisition, in the municipality of Sagunto, of a plot of land measuring 140,000sqm, where we could build a 180,000-sqm warehouse on two floors or 90.000m2 on single level buildings. The project can be built immediately. Rent prices in Sagunto are extremely affordable compared to other areas, excellent location on the Mediterranean corridor, which is why many companies are eying the area.

The pandemic has shown the importance of having local manufacturing companies. What's your stake in that?

I agree; it has been proven that is important to not to depend completely on one provider, specially overseas providers. We have realized with the pandemic that problems might crop up. We are in a geopolitical context, and the logistics chain might sometimes be prepared for contingencies. We fear this might not be the last pandemic, and we have to be prepared. In addition, more trade wars might occur, so we have to be prepared as well. More companies are seeing the value of having a local storage facility as buffer and to be able to respond to urgent customer needs.

How do you differentiate yourselves from your competitors in terms of sustainability?

We were pioneers in Spain to systematically have environment certifications in 2003. Back then, investing in these areas in Europe was a plus. Today, it is essential to invest in environmentally friendly buildings. It is paramount to have sustainable buildings if a company wants to stay in the sector for the long term. Some of our buildings are at the top in terms of sustainability. Today, many skilled workers also work in warehouses, so we need to provide them with a comfortable environment. Having warehouses with comfortable insulation or natural light are small factors that help companies retain employees. Workers truly value working in comfortable environments, and we are pioneers in that area. We are working heavily on well-being policies, and we are already implementing many strategies for the people working in our buildings.

What is your main priority for 2021?

We are focused on sustainable growth. We are in an expansion process in Spain but at sustainable level. That is the guarantee for our clients that we will not dramatically increase the price of rents. This will help us build a long-term relationship with our customers. We are looking at responsible growth for the long term.