SEGRO has forecast further yield compression in the industrial market in a positive trading update this morning.
The industrial specialist contracted a record £27.3m of new headline rent in Q1 2018 – up from £16.3m in the same period last year.
It secured close to 5.3m sq ft of new prelets, including the first two prelets at SEGRO Logistics Park East Midlands Gateway.
Net investment in Q1 totalled £180m, comprising £65m of asset and land disposals, £24m of asset acquisitions and £91m of development capex and land purchases.
SEGRO said it expected total development capex to exceed £350m for 2018 as a whole.
David Sleath, chief executive of SEGRO, said: “Occupational demand remains encouraging across all our markets, particularly driven by the growth of online retailing.
“The combination of attractive yields and rental growth, resulting from limited supply and the enduring positive structural drivers of occupier demand, continues to appeal to investors. Consequently, the investment market remains active with evidence of some further yield compression in recent urban and big-box warehouse transactions.”
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