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consider opportunities in retail logistics sheds that feed our online appetites

By ANNE ASHWORTH FOR THE DAILY MAIL 19 November 2021

Black Friday is almost here, and Christmas is only 34 shopping days away.

If you want to bring seasonal cheer to your portfolio, you could consider the opportunities in the sprawling retail logistics steel sheds that line motorways and have sprung up close to towns and cities, to feed our online appetites.

For every £1billion spent online, an extra 1.36m square feet of space is required, fuelling a rush by retailers to rent the ‘shed’ warehouses owned by the logistics Reits (retail estate investment trusts).

Among the top players in the shed sphere are Segro, Tritax Big Box, AIM-listed London Metric and Warehouse. Meanwhile Urban Logistics, a specialist in ‘last-mile’ units (the final staging post on a parcel’s journey) is moving from AIM to the main market, capitalising on the clamour for sheds.

Online is not the only factor behind this boom, a trend accelerated by the pandemic that Savills forecasts could continue for another three years.

To the chagrin of shoppers, retailers may not offer big Black Friday discounts on electronic gadgets, amid a shortage of the semiconductors vital to these items. The dearth of these components is part of the wider global supply chain crisis affecting goods of all types, which retailers are trying to tackle by the re-shoring of storage and other operations.

As Richard Moffitt, chief executive of Urban Logistics explains: ‘The just-in-case approach has replaced the just-in-time philosophy of previous years.’

Shares in Urban Logistics are up 22 per cent since January, while Segro shares have risen 39 per cent. Also soaring is US firm Prologis, one of Amazon’s top landlords, which this month pledged to add to its extensive UK operations…

Shares in Tritax Big Box, whose clients include Marks & Spencer and Next, stand at a 26 per cent premium to the trust’s net assets, for example. Other Reits are also at a premium. Or are logistics shares reassuringly expensive, if only because of the yields on offer?

These may be lower than before, but still compare favourably with cash or gilts. Richard Williams of QuotedData, the investments analysis group, says the lack of available space makes it difficult for tenants to negotiate down rents: ‘It’s a landlords’ market.’

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