Houston, a big market for both companies, accounts for 4.3% of the 705 million square foot portfolio of San Fancisco-based Prologis in the United States, according to a company report. Prologis owns and manages 868 million square feet worldwide.

Already the largest owner of industrial properties in Houston with 30.2 million square feet in 210 buildings in the local market, Prologis will gain 5.8 million square feet in 22 buildings with the acquisition of Indianapolis-based Duke Realty , according to the companies’ first quarter reports.

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The companies’ combined footprint, totaling more than 36 million square feet, represents approximately 6% of the 569 million square feet of industrial space in the Houston area, based on total market size data provided by Transwestern. Real Estate Services.

With this acquisition, Prologis will acquire additional properties in the key markets of Southern California, New Jersey, South Florida, Chicago, Atlanta and Dallas.

Prologis gains Duke’s 17.2 million square feet in industrial real estate across 45 buildings in Dallas, according to Duke’s first quarter results.

Prologis said it would retain about 94% of Duke’s portfolio and shed one market, but did not disclose which market. The acquisition includes 153 million square feet of operating properties in 19 major US markets, plus 11 million square feet of new properties under development and 1,228 acres of land.

“This transaction increases the strength, size and diversification of our balance sheet while expanding the opportunity for Prologis to apply innovation to drive long-term growth,” said Tim Arndt, Chief Financial Officer of Prologis. “In addition to generating significant synergies, the combination of these portfolios will help us provide more services to our customers and generate additional long-term earnings growth.”

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The companies said the so-called synergies created by the merger have the potential to generate approximately $375-400 million in annual earnings and value creation, including $70-90 million from incremental cash flow and essential revenue, $5-10 million cost of capital. cost savings and $300 million in incremental development value creation.

Prologis is also taking over a number of Amazon properties with the acquisition. Amazon is Duke’s Realty’s biggest customer, accounting for about $48.2 million in annualized rent for the company in the first quarter. In Houston, Duke sold two large Amazon warehouses it had developed in Brookshire and Katy in late 2020 and early 2021.

Amazon is also Prologis’ largest customer in the first quarter.

E-commerce demand continued to drive construction last year with 24 million square feet of new industrial space delivered across the Houston area, according to commercial real estate firm NAI Partners. According to NAI Partners, Houston’s industrial real estate market last quarter saw strong demand outpace supply with a net absorption of 5.6 million square feet, meaning many more tenants moved into space than before. they never left.