Retailers need more logistics space to cope with a wave of new online shoppers won during the pandemic, warehouse giant Segro said as it bought a London site for £133 million.
David Sleath, chief executive of FTSE 100 landlord Segro, which counts Amazon, Tesco and Ocado as customers, said many firms, including grocers and homeware retailers, are looking for more storage and distribution space.
Sleath told the Evening Standard: “During the pandemic many people came to try online shopping for the first time because they had to, and they have been impressed at how easy and convenient it has been. Many will stick with buying online even when the crisis is over.”
In addition to needing extra space as online orders grow, Sleath said other firms want more space to ensure they can quickly supply even when there is disruption to normal trade-flows.
Between July 1 and October 20 Segro signed contracts worth £15.8 million of new rent for the company. Lettings were agreed with firms including Amazon and online homeware retailer Relaxdays.
Sleath said: “Rental collection has improved this quarter and we remain confident in the outlook for our business despite the macroeconomic uncertainties caused, in part, by Covid-19.”
Segro today said it has bought Electra Park, a 13-acre estate in Canning Town, from global investment manager Schroders.
Property agent Gerald Eve advised the vendor and JLL represented Segro.
The purchase boosts Segro’s presence in the capital, and the acquisition will bring in £3.4 million of rental income for the company.
Alan Holland, a director at Segro’s Greater London portfolio, said the site is in an area undergoing significant redevelopment. He said: “This should further improve the already attractive supply/ demand dynamics and create the potential for strong rental growth, as we have seen happen in other inner London markets.”
In June Segro raised £680 million via a share placing to help fund new purchases and warehouse developments.
The firm is currently constructing, or will soon start building, more than 1 million sq m of new space.