Camden Town Brewery’s Enfield facility, rented by Segro
(Picture: Segro)London’s attractiveness as “the beating heart of the UKeconomy” has led to soaring demand for space to store food and make films, according to industrial property giant Segro.
The FTSE 100 company reported rents up 24% in its industrial base in London, where it leases warehouses to traditional manufacturing and e-commerce businesses as well as accommodating the growth of quick commerce, or “q-commerce”, where grocery firms deliver fresh food within an hour.
“The demand for space is so strong we’re finding people competing to get the space we do have,” chief executive David Sleath told The Standard.
“The extraordinary growth in demand has been supercharged by the pandemic and the shift to immediate delivery.”
That demand has helped boost the value of Sergo’s portfolio of property by 29%, or £4 billion, to £18.4 billion in the last year.
The company is also benefited from property investors looking to warehousing for better returns.
“We think it’s well set. The rent’s going to keep moving up while the demand is growing,” said Sleath. “At the moment it’s really hard to get the land to meet the demand.”
Notable deals during the year included leasing three warehouses in Enfield to Netflix for sound stages, studios and areas for make-up and costumes.
Profits at the firm climbed 20% to £350 million for 2021 and it raised the dividend by 10%. Analysts at Peel Hunt said the performance was “well ahead” of expectations.
While London and the south east remain key to the firm, accounting for about half its portfolio, it is also seeing rental growth across its sites in Europe.
It said urban markets such as Paris where land is in short supply are proving profitable.
The company reported it has 1.1 million sq m of projects under construction or in advanced pre-let discussions.
That equates to “£82 million of potential rent”, it said.
Shares rose 19p, or 1.5%, to 1296.5p, topping the FTSE 100.
