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Philip Dunne, president of Prologis Europe, tells PropertyEU why the logistics property sector is proving a match for the bumpy road to economic recovery.

Speaking after Philip Dunne, president of Europe at Prologis, said take-up across Europe remains strong.

DUNNE: 'Despite the uncertain economic environment, demand for high-quality strategically located logistics facilities continues to be driven by three factors. These are the reconfiguration of the European supply chain as customers consolidate facilities and drive greater supply chain efficiencies; trade and consumption and the increasing popularity of e-commerce.

'The effect of these drivers is particularly notable in markets such as the UK, Germany and Poland, where we are seeing relatively more build-to-suit activity due to the limited volume of existing modern space. For investors, the logistics sector has proven to be very resilient despite the slow economic growth across Europe, and demand for our product continues to be positive despite the ongoing uncertainty.'

PEU: How has this affected your leasing numbers?

DUNNE: 'Through 2012 Prologis Europe's leasing activity totalled 3.1 million m2. The fourth quarter was the strongest with 1 million m2 of leasing activity. First quarter 2013 leasing activity was in line with expectations. New leases totalled 137,200 m2 and renewals totalled 362,000 m2.

'Highlights included a 43,500 m2 new lease with Docout - a document and business process outsourcing company - in Spain and a 27,000 m2 new lease to supermarket owner Teresin in Poland. It is clear that there is no shortage of demand for high-quality, modern, strategically located logistics real estate in Europe.'

PEU:Tell us about the leasing levels across the European portfolio.

DUNNE: 'Across Europe, occupancy has largely recovered from the seasonal dip in January and we remain 40 basis points ahead of our plan.

'The UK & Northern Europe were both 97.5% occupied at end-March 2013. Vacancy rates are virtually nil in Munich, Rotterdam and Brussels, and our customers in Germany’s automotive sector remain resilient.

'Central and Eastern Europe was 90.2% occupied. This is the biggest improvement across Europe, up 330 bps between December 2011 and March 2013. Influencing factors include the growth of existing customers in the Czech Republic and Slovakia, the continued consolidation of retailers’ logistics operations in Poland, and supply chain reconfiguration across the CEE.

'Southern Europe was 90.1% occupied and although the region has faced its challenges, we are seeing increasing demand for larger facilities of 30,000 m2 and over, mostly due to consolidation. Le Havre is also faring well, thanks in part to the lack of industrial action and an increase in container traffic, which grew 4.1% year on year to 2.3 million TEU in 2012. We are seeing some encouraging business interest in Italy and we are cautiously positive about prospects in Spain.'

The second half of the interview is available here