Segro PLC (LON:SGRO) on Wednesday said it logged at a 43% rise in new leasing activity during the third quarter, with demand for warehouse space driven in part by e-commerce customers.
The real estate investment trust, part of the FTSE 100 index, said it contracted £12.6mln in headline rent, up 43% from £8.8mln in the year-ago period. The figure for the July 1 to October 16 period includes £4.2 million in rent from the existing space.
READ: SEGRO enjoys record quarter in terms of securing new headline rent
Total contracted headline rent in the nine months to September 30 rose to £52.0mln, also up 43% from £36.4mln in the same period in 2017.
David Sleath, Segro's chief executive, said: "The structural trends of e-commerce and urbanisation continue to underpin occupier and investor demand for prime warehouse space, notwithstanding near-term economic and political uncertainty in the UK. We remain optimistic about our prospects for the remainder of the year and into 2019."
Segro called its development pipeline is “strong”, with 891,000 square metres approved or under construction, of which 71% has been pre-leased.
The vacancy rate increased “slightly” to 5.2% from 4.8% in the period ended June 30, primarily due to completion of speculative developments during the period. The vacancy rate on the standing portfolio has remained stable, said Segro.
“Buoyant occupational and investment demand for industrial real estate continues to drive strong returns for Segro,” said analysts at Liberum. “Alongside stable vacancy, lettings activity remains strong with rents on renewal and review +9.5% YTD vs. +5.5% at H1.”
Liberum has a 'buy' rating on Segro.
In April, the company said it had contracted £27.3mln of new headline rent during the period from July 1 to October 16.
Segro CEO Sleath added: "In line with our disciplined approach to capital allocation, we have exchanged or completed disposals totalling over £200 million during the period at a significant premium to book value, taking advantage of strong investor demand and a limited supply of prime, well-located assets.”