Prologis Leases New Jersey Project

Prologis Inc. ( PLD - Analyst Report ) , a leading industrial real estate investment trust (REIT), has recently signed two new lease agreements spanning about 740,000 square feet of development space in New Jersey. The deals were penned with unnamed companies for an undisclosed amount.

In concurrence with the agreements, Prologis would lease 395,000 square feet to a wholesale packaging distributor and about 345,000 square feet to an e-commerce food retailer. At the same time, the company would develop an additional 140,000 square feet of speculative space at the leased property, which involves a former waste disposal site.

Prologis had earlier acquired the 50-acre site in 2008. Since then, the company has diligently worked with the U.S. Environmental Protection Agency and the New Jersey Department of Environmental Protection to implement a comprehensive development plan. This envisages a permanent capping and closure of the landfill and returning the site to productive use. On completion, the property would feature a LEED-certified, 880,000 square-foot logistics facility, while the reaming space would be returned to greenery.

Besides its environment-friendly features, the leased property titled Pulaski Distribution Center is strategically located in close proximity to the Port of New York/ New Jersey and in the vicinity of the New York City. Consequently, the development project offers significant locational advantage to the lessees, and brings on board a Class-A facility in one of the most dynamic and land-constrained infill areas in the U.S.

With improving property values and growing institutional demand for quality properties, Prologis has also witnessed a growing customer interest in new build-to-suit development projects across the globe. Additionally, leasing decisions that were earlier postponed due to volatility in the markets are gradually coming off the shelf. As of September 30, 2012, Prologis had approximately 22 million square feet of logistics and distribution space within the New York/New Jersey market.

Prologis acquires, develops, operates and manages industrial real estate space in North America, Asia and Europe. The industrial distribution warehouse space of the company is located in some of the busiest distribution markets across the globe. The properties of the company are typically located in large, supply-constrained infill markets in close proximity to airports, seaports, and ground transportation facilities, all of which enable rapid distribution of customers’ products. This has enabled the company to gain a significant pricing advantage over its competitors.

We currently have a Neutral recommendation and a Zacks #3 Rank for Prologis, which translates into a short-term Hold rating. We also have a Neutral recommendation and a Zacks #3 Rank for Winthrop Realty Trust ( FUR - Snapshot Report ) , one of the peers of Prologis.