Se­gro ex­pects de­mand for ware­house space to grow as con­sumers flock to web re­tail­ers

The Daily Telegraph - Business - - Business - Rachel Mil­lard By

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.

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