Bloomberg News reports that AMB Property Corp. is in merger negotiations with ProLogis, the world’s largest warehouse operator, to create a $14 billion industrial real estate investment trust, with control over approximately 600 million square feet of warehouse space around the world.

The resulting combination would likely mean reduced costs for warehouse operations as the U.S. market continues its recovery. In fact, vacancy rates in the U.S. industrial market has been dropping, which translates into an increased demand for warehouse space, according to commercial real estate broker Grubb & Ellis.

In addition, a merger of the two REITs would enable them to reduce costs by closing duplicate offices in markets around the world, thereby realizing “tremendous” general and administrative savings, Steven Frankel, an analyst at Green Street Advisors, told Bloomberg.

It could also mean an eventual demotion for one of the two entities, Bloomberg reports.

“We expect that in this merger, AMB would be the surviving entity,” analysts at RBC Capital Markets, LLC report. ProLogis, they told Bloomberg, “has been under pressure since the credit crisis to reduce leverage, cut overhead costs and rationalize its underproductive assets.”

As we know all too well, that’s not an uncommon problem in these turbulent economic times. For executives who are facing such challenges, one option worth considering is bringing on a strategic sourcing specialist to provide an objective review of potential cost savings opportunities. Often, an experienced sourcing consultant can identify and implement savings strategies faster than in-house staff who typically hold a range of other responsibilities and who require time and training to be brought up to speed.

If you would like assistance in developing cost reduction strategies for your business, contact us via our Source One website.
Share To:

Thomas Derr

Post A Comment:

0 comments so far,add yours