Segro doubles leasing deals as warehouse sector shows no signs of slowing

Warehouse property developer Segro has so far this year signed new leasing deals worth twice as much as the same time last year, showing the demand for industrial property continues to hold up.

The company agreed £16.3m of new rental deals in the first three months of 2017, compared to £8.6m a year ago. At least £10.6m of this was for buildings that have not yet been finished.

Its vacancy rate for its properties remains stable, at around 5.6pc, and during the first quarter the developer approved or began building around 3.1m sq ft of new space.

This has been partly funded by a £556m share placing that the company carried out in September on the back of increasing demand from companies such as Amazon, which have boomed in recent years.

“Investor demand for warehouse and industrial assets remains strong across our markets and this may lead to further yield compression and capital growth in the first half of the year,” said David Sleath, chief executive. 

The money from the rights issue was also used to buy Aviva’s 50pc interest in a £1.1bn development fund that owns buildings near London’s Heathrow airport.

The company is building a number of warehouses across Europe for discount retail chains, which have also seen rapid growth in recent years.