Prologis to Boost Japan Rents, Buy Warehouses on Abenomics Bonus

Prologis Inc. (PLD), the world’s biggest warehouse owner, plans to increase rents and spend as much as $600 million a year to develop warehouses in Japan as Prime Minister Shinzo Abe’s policies boost corporate confidence.

The company expects rents to rise about 3 percent annually “for a while” and will invest $500 million to $600 million a year in warehouses, said Hamid Moghadam, chairman and chief executive officer of San Francisco-based Prologis. That compares with the the average annual investment of $400 million to $600 million historically, he said.

Abe’s pledge to end 15 years of deflation and the Bank of Japan’s monetary easing policy, dubbed Abenomics, have boosted sentiment, contributing to a recovery in the nation’s property market. Industrial spaces, such as warehouses, returned 7.6 percent on average for the year ended July, more than double that for office buildings, according to London-based Investment Property Databank Ltd.

“Abenomics has created a lot of confidence and that is an added bonus,” Moghadam said in an interview in Tokyo today. “Going forward, I am actually pretty optimistic about the business even more so than before.”

Prologis, which manges 2,942 buildings in 21 countries had $46.9 billion of assets under management as of September 2013, according to the company’s website. Japan is Prologis’s second biggest market after the U.S. with 42 properties, according to a company’s presentation material. Its customers include Seattle-based Amazon (AMZN).com, Inc., the world’s largest online retailer, Atlanta-based Home Depot Inc. (HD) and Tokyo-based Nippon Express Co. (9062)

Confidence among Japan’s large manufacturers rose to the highest since the early stages of the global credit crisis in 2007, a quarterly Tankan survey in October showed.

Real estate deals in Japan will rise to as much as 4 trillion yen ($39 billion) this year, the most since 2008, according to Chicago-based Jones Lang LaSalle Inc. (JLL)

To contact the reporters on this story: Kathleen Chu in Tokyo at kchu2@bloomberg.net; Katsuyo Kuwako in Tokyo at kkuwako@bloomberg.net

To contact the editor responsible for this story: Andreea Papuc at apapuc1@bloomberg.net

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