| It's been about six weeks since the self-titled ?merger of equals? between ProLogis and AMB, the two largest owners/operators of industrial real estate in the US. For insight, our Houston reporter sought out Grubb & Ellis national director of research for the industrial sector Rene Circ. Pre-merger, there were five sizable pure-play industrial REITs—ProLogis, AMB, DCT, First Industrial, and EastGroup—and two large diversified (meaning multiple property types) REITs, Duke and Liberty. Post-merger, AMB/PLD will have 600M SF, almost double the competition?s total 320M SF. It'ssix times larger than the next competitor, Duke, and 20 times larger than the smallest member of this group, EastGroup. The combined company will have a 5% market share of competitive space in the US, and in some areas will have more than 10%. |
| Northgate Distribution Center No. 6 at 11441 Hillguard Rd in Dallas. Rene says market segmentation will keep AMB/ProLogis pricing power in check, but other landlords will have to compete on price. Thus, the merger could have an adverse impact on rents as smaller landlords undercut to pull customers from the one-stop-shop. Rene expects an increased level of activity in the short term, especially as the combined company goes through portfolio reconfiguration. He predicts the merger will be good for both companies: AMB gains access to new global markets and ProLogis gets help in the deleveraging process that's tied it up for the past two years. |
INDUSTRIAL WHOPPER
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