Presentation from Prologis' Luis Gutierrez at Industrial Asset Management Council (IAMC)'s event in Mexico City, September 7-8, 2016. http://www.iamc.org/International/Presentation-Archive

1. 2016SEPTEMBER
LUIS GUTIERREZ President Prologis Latin America
Supply Chain and The Emergence
of E-Commerce in Mexico

2. 1.- GLOBAL TRENDS
A global phenomenon
Dreat diversity of customers
Yet, relatively few specific use-cases
2.- REAL ESTATE IMPLICATIONS
High intensity of use
Consistent evolution of user requirements
Prologis
3.- THE EMERGE OF E-COMMERCE IN MEXICO
Prologis Park Grande

3. GLOBAL TRENDS

4. 4
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10,000
15,000
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A Global Phenomenon
E-Commerce Sales, Global
($, trillions)
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
2010
2011
2012
2013
2014
2015
2016
2017E
2018E
2019E
2020E
E-Commerce Share of Retail Sales
(%)
0
5
10
15
20
25
US Western
Europe
Japan China Latin
America
2010 2015 2020
Source: e-Marketer, Prologis Research Source: Goldman Sachs, Prologis Research

5. Diversity Among the Industry’s Customers
Source: Internet Retailer, Prologis Research 5
Distribution of E-Commerce Retailers by Online Revenues, U.S.
(%)
Major Online
Retailers
(>$5B)
40%
Midsized
Retailers
($250M-5B)
47%
Smaller
Retailers
(<$250M)
13%

6. 6
Yet, Five Basic Customer Profiles

7. Share of E-Commerce in GDP
7

8. 8
Stages of Growth Across the Globe

9. REAL ESTATE IMPLICATIONS

10. 10
The Global E-Commerce Revolution
1
2
3
4
5
Still in early stages
Wide variety
High intensity of use
Location, location
flexibility
Omni-channel
experimentation
Currently, e-commerce comprises 20% of new leasing, up
from less than 5% five years ago
Prologis has some 400 e-commerce customers occupying
more than 50 million square feet (MSF) of logistics buildings
Our research reveals online retailers need approximately
1.2 MSF per billion dollars of online sales on average
Favored locations are adjacent to or within major population
centers, driven by trends like faster delivery times,
transportation cost and retailer scale.
The flexibility to deliver for consumers across channels and
whenever they want leads retailers to ask more of their
supply chains.

11. 11
High Intensity of Use

12. 12
E-Commerce Building Characteristics

13. The Emergence of
E-commerce in Mexico

14. 14
1. Sources: eMarketer, Prologis Research
2. Note: excludes travel and event tickets
Mexico E-commerce Sector in Early Innings
Mexico E-commerce Sector vs. Global Peers
(%, Mexico E-commerce Sales as a % of Total Retail Sales)
E-commerce a Rapidly Growing Sector
(Mexico E-commerce Retail Sales, USD, billions)
-
2
4
6
8
10
12
14
2014
2015
2016F
2017F
2018F
2019F
>20% CAGR
0
1
2
3
4
5
6
7
8
9
10
Mexico Brazil U.S.

15. Demand for E-fulfilment Facilities in Mexico is Rising
1. Footnote (8pt Arial)
• E-commerce demand for Mexican logistics real
estate poised to grow in the coming years, as:
• Barriers for e-trailers are diminishing
• Domestic customers (e.g., Liverpool) are reaching scale
and their e-commerce businesses may merit dedicated
and internally operated e-fulfilment facilities
• Notable market entries and business expansions of global
e-tailers and e-commerce logistic services providers have
the potential to rapidly grow their platforms in the coming
years
• Scarcity of available modern distribution facilities and
barriers-to-supply in Mexico City might require e-tailers to
plan now for future space requirements
15

16. 161. Footnote (8pt Arial)
Demand for E-fulfilment Facilities in Mexico is Rising
E-fulfilment operations require multiple
major distribution centers, requiring multiple
millions of square feet across several
(or many) distribution centers
SCALING PLATFORM
$250-$500M USD SALES
INCUBATION PHASE
<$250M USD SALES
TAKE-OFF
>$500M USD SALES
Retailers tend
to consolidate
their fulfilment
operations into
a single 500K
SF to 1M SF
facility
Operations either
occur in the
existing supply
chain (for brick-
and-mortar
retailers) or
leverage 3PLs
and/or exist within
a handful of small
locations
Real Estate Requirements as Customers Scale their Operations
Mexico
2016Mexico
2012
Mexico
~2020 (F)

17. 17
Demand for E-fulfilment Facilities in Mexico is Rising
• E-commerce is a key structural demand
driver of logistics real estate globally, and
might raise the prospects for ‘normalized’
demand growth in Mexico City as the
sector matures
• E-commerce demand for Mexican logistics
real estate poised to grow in the coming
years, as:
i. Barriers for e-trailers are diminishing
ii. Domestic customers (e.g., Liverpool) are reaching
scale and their e-commerce businesses may merit
dedicated and internally operated e-fulfilment
facilities
iii. Notable market entries and business expansions of
global e-tailers and e-commerce logistic services
providers have the potential to rapidly grow their
platforms in the coming years
iv. Scarcity of available modern distribution facilities
and barriers-to-supply in Mexico City might require
e-tailers to plan now for future space requirements
Source: CBRE, Proglogis Research
Note: Greater Mexico City includes the Toluca submarket
0
1
2
3
4
5
6
7
8
2011-2015 Annual Avg. 2016F-2020F Annual Avg.
E-commerce Share of Demand
Net Absorption, Greater Mexico City
(square footage, millions)

18. 18
Prologis Buildings
Prologis Park Izcalli, Mexico

19. 19
Prologis Buildings
Prologis Park Tres Rios, Mexico

20. 20
Prologis Buildings
Prologis Park Tres Rios, Mexico

21. 21
Prologis Buildings
Prologis Park Grande, Mexico

22. Prologis Park Grande - Redefining logistics in the CTT
1. Footnote (8pt Arial)
• Prologis Park Grande will be the largest master-planned
logistics park in Mexico. With the first buildings ready for
move-in in 2016 and a long-term plan for development our
customers can benefit now and in the future.
• Local property management professionals providing 24/7 support
• Inventory facilities ready to occupy in October 2016
• Land ready for build to suit development that can be delivered
quickly
• All buildings will be built to LEED specifications, the North American
standard for sustainable development.
• State-of-the-art building features
• Building design to accommodate a variety of storage and service
area needs for operational efficiency
• 36 ft clear height allowing for full-flexibility of storage and product
flow
• Total investment 300 M USD
22

23. 231. Footnote (8pt Arial)

24. 241. Footnote (8pt Arial)

25. 25
Construction progress
Main Access Project Rendering
Building 4, 95% Construction Progress
Main Controlled Access Arch, 15% Construction Progress
Building 3, 95% Construction Progress

26. 26
Construction progress
Pad Ready, Building 2
Pad Ready, Building 1