Opportunity
Sweden’s Örebro region is a well-established logistics location. It was ranked second by the trade newspaper Intelligent Logistik in a 2016 overview of Sweden’s best logistics locations, and demand is high. Prologis owns a 45,000 square meter distribution center in the area named Örebro DC1.
Challenge
While Örebro DC1 is ideally located, the building itself was in need of an update in order to meet the strict standards of our portfolio. The building was by no means near the end of its lifecycle, so Prologis decided to perform an extensive renovation. Renovations are an integral part of our business strategy and an example of our long-term focus, innovative approach and commitment to sustainability.
Solution
The renovation is currently underway and was scheduled when Örebro DC1’s tenant decided to move to a different location. The upgrade will include new floors and outside panels, replacement of several docks and ports, interior painting, pavement improvements around the building and installment of LED lighting, which is at least 35 percent more efficient than traditional warehouse lighting and the standard in all new Prologis development projects and lighting retrofits. The renovation is expected to be finished during the second half of 2018.
At the beginning of the renovation, Prologis signed an agreement totaling 33,000 square meters with KGA Logistics AB, Sweden’s market leader in the distribution of alcoholic beverages. KGA Logistics AB is an independent subsidiary of the restaurant distributor Martin & Servera, and its biggest client is Systembolaget. The move means that KGA Logistics AB will almost double its warehouse capacity and bring around 60 employees to Örebro. The lease includes a possibility to lay rail tracks into the building. As a curiosity, it also includes a fully functional bowling lane and gym.
Lesson
Örebro DC1 is the oldest asset Prologis has in Sweden. Because of our expertise in not only greenfield development but also refurbishments and renovations, we were able offer logistics real estate up to the highest standards without the need to demolish existing infrastructure. KGA Logistics AB’s decision to enter into a lease is an endorsement of this strategy.