Segro expects demand for warehouse space to grow as consumers flock to web retailers
DEMAND for warehousing and data centres is booming after the coronavirus pandemic triggered a surge in online shopping and forced supermarkets to strengthen their supply chains, property firm Segro has said.
A jump in interest from tenants pushed Segro’s gross rental income up to £187.2m in the six months to the end of June, 8pc higher than a year earlier.
The FTSE 100 warehouse business – whose major clients include Amazon – reported a 6.5pc rise in adjusted profits to £140.4m. The value of its portfolio rose 0.7pc to £11.2bn.
Customers flocked to the internet during lockdown, with non-food digital sales up 48.2pc from a year earlier in
June, according to figures from the British Retail Consortium.
Meanwhile, an initial wave of panic buying and a jump in demand for home delivery meant grocers were forced to improve their logistics operations.
Segro’s success stands in stark contrast to shopping centre owners such as Intu – which went bust in June – and Hammerson, which is scrambling to raise cash after beleaguered retail tenants stopped paying rent.
Ministers are considering higher taxes on online sales and customer deliveries to try to level the playing field with struggling bricks-and-mortar retailers, which could affect Segro’s customers and business model.
David Sleath, chief executive, said: “Tax is a complicated area. Consumers are going online due to the convenience and wide range of choice.
“During lockdown it was the only way of getting stuff, so it’s a growth sector.
“Someone said to me, ‘you have to be very careful taxing a clear growth sector’. It’s a bit like in the early Nineties, trying to tax motor cars to encourage people to go back to using a horse and cart. Consumers don’t really work that way – they respond to choice and pricing.
“I think we will have to wait and see what the Government does, but my view is that even with these tax changes the sector will continue to grow – it’s an unstoppable train, frankly.”
Shares in Segro closed up 2.5pc at 987.6p.