There is no doubt that the biggest news story in the property sector this week was SEGRO’s whopping £680m equity raise.
The over-subscribed placing, that will be used to fund development opportunities in the booming logistics sector, put an exclamation mark on the severe disconnection that is in play between the different property sectors.
If you compare the news flows and results from industrial and logistics landlords with that of retail landlords, the divide could not be bigger. You would be surprised if a retail landlord would be able to raise £6.8m in a placing right now, let alone £680m.
SEGRO, the biggest listed property company with a market cap of £9.5bn, is not the only industrial and logistics landlord that is in buoyant mood right now, with the covid-19 pandemic escalating online shopping trends.
LondonMetric raised £120m in May targeting sale-and-leaseback opportunities and today Stenprop, which specialises in multi-let industrial estates, said it was keen to take advantage of investment opportunities at “risk-adjusted pricing”.
We wrote last month that it was important to look deeper than the headlines, as each property sector is nuanced and made up of several sub-sectors that have their own supply-demand dynamics at play. A prime example of this is in the retail sector where you have shopping centres all but collapsing, and retail parks being tarred with the same brush, despite their many benefits.
The other big property sector that has made the headlines in recent months is offices. There is much debate and conjecture over how the traditional office will work in a post-covid world. Office occupiers are faced with challenging decisions regarding future operations and requirements.
Some observers are predicting less space requirements due to working from home capabilities, while others believe social distancing measures will mean office floorspace will need to be larger to safely accommodate staff. There does not seem to be a consensus yet, and there probably will not be one going forward, with different companies taking different approaches.
Another consideration that will have huge consequences for the office market is whether companies will decentralise their offices to help staff avoid congested public transport networks.
It is something that McKay Securities, which owns a portfolio of offices and industrial asset in the South East, should be well placed to take advantage of if it does materialise. It owns a big portfolio of offices in the South East outside of London that have significantly lower occupational costs and benefit from generous car parking facilities.
A lot depends on attitudes to covid-19 as the country moves out of lockdown. QuotedData will continue to keep you abreast of all the developments in the property sector.