Coronavirus has brought about a “step-change in consumer behaviour” and will cause a permanent shift to more online shopping, according to the UK’s largest listed property company.
Warehouse owner Segro, which announced its results for the year to December 31 on Friday, said a surge in ecommerce across Europe during the pandemic would leave a lasting legacy, with consumer habits likely to be “changed irrevocably”.
The migration of shoppers online has been a boon for Segro and other logistics and warehouse companies. The value of the company’s portfolio of UK and European warehouses increased 10.3 per cent to £13bn in 2020. Adjusted pre-tax profits increased 10.8 per cent on 2019 to £296.5m.
Segro has been a rare beneficiary of the pandemic in the commercial property industry. The rise in online shopping and the stockpiling of essential goods have made logistics and warehousing facilities in high demand.
In the UK, the proportion of sales made online has surged in the past year, rising from 19 per cent of the total in February 2020 to 36 per cent in January, according to the Office for National Statistics.
“Our customers certainly do not expect there to be a significant retreat and are already preparing to adapt their businesses to respond to levels of online sales that are well ahead of previous expectations,” said Segro.
According to index provider MSCI, average UK industrial property values rose 4.6 per cent in 2020.
Segro’s shares are trading above their pre-pandemic levels, having recovered from 698p in mid-March to trade at 963p on Friday morning.
The company collected 98 per cent of the rent it was owed over the year, despite concerns early in the pandemic that some tenants would be unable to pay.
“The pandemic has reinforced the importance of efficient and resilient distribution networks to facilitate the provision of a wide variety of goods and services, leading to increased demand for warehouse space,” said David Sleath, Segro’s chief executive.
The pandemic “will likely change the way that our world functions”, added Sleath, whose company announced on Friday that it was introducing a policy to allow staff to work wherever they want after the pandemic.
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