Sheds giant Segro increases profits but warns of battle for London land

A “severe undersupply” of industrial land in London coupled with a queue of retailers wanting shorter delivery times, has positioned Segro for growth, the warehousing landlord’s boss said on Friday.

David Sleath was commenting as the FTSE 100 firm revealed pre-tax profits last year soared to £976.3 million from £426.4 million.

It was boosted by new developments and a rise in property valuations and rents.

Sleath said: “Even with the softer residential market, housebuilders are still aggressively competing with us and rivals to buy land. Thankfully we have properties under construction and a healthy landbank. But sites for distribution centres are running very low in and around the capital.”

Despite the need for buildings, the firm said it won’t start one redevelopment project at Heathrow “until there is greater clarity over expansion of the airport”.

Segro said it continues to have “robust” demand for space. Last year rental income increased thanks to a string of new lettings, including leasing around two million square feet to Amazon.

It was one of the biggest risers on the blue-chip index, up 32.6p to 587.8p.

Morgan Stanley analyst Bart Gysens said: “Sites are increasingly scarce, providing owners such as Segro with unprecedented pricing power.”