Is This Peak Urban Logistics? Because Investor Interest Can Hardly Get Higher
Urban logistics peaked investors’ interests before the pandemic. But post-pandemic, is it possible we’ve reached peak urban logistics?
In the course of one long weekend after Easter, four major transactions and one greenlighted for development suggest that investors will struggle to outdo today’s performance.
SEGRO, the biggest REIT involved in the capital’s last-mile delivery sector, sank another £195M into expansion plans.
The company bought abrdn’s 100K SF Grand Union Trade Park in Park Royal, a 4-acre plot in one of the most heavily used last-mile locations. It also added to its growing inner London pipeline with the purchase of two assets in Wapping and Clapham, each 2.6 acres, which between them cover both east and west of the city. They will deliver 150K SF of new development between them.
Simultaneously another REIT, LondonMetric, bought six London urban logistics warehouses in separate transactions for a total investment of £26.7M, a reversionary yield of more than 4.5%.
Three properties in Colliers Wood, Stratford and Stockwell have been acquired with vacant possession and will be redeveloped or refurbished at an anticipated yield on cost of 4.5%.
Meanwhile, investor/developer Firethorn Trust won planning permission for a 94K SF last-mile depot at Erith. The Blueprint scheme will be complete by early summer 2023 and serve east and central districts of the city. The scheme marks Firethorn’s first venture into London’s logistics market.
Outside the capital, today saw the last-mile logistics focused REIT Urban Logistics announce it had deployed a further £45M at a blended net initial yield of 6.7%. Total deployment since December 2021 now stands at £185M, a blended net initial yield of 5.4%. Its star acquisition was the East Midlands Logistics Hub, a 72-acre site with potential for another 175K SF development, acquired for £40.7M.
On a larger scale, Friday last week saw U.S. investor Hines Global Income Trust acquire the 400K SF urban logistics hub at City Central Coventry.
“With the logistics market incredibly well bid, we are increasing our investment focus towards smaller opportunities in the strongest urban centres where we can leverage our asset management,” LondonMetric chief executive Andrew Jones said.
