The commercial property market has had to withstand the dual challenges of Brexit and Covid-19 over the last year but it should be noted the outlook is far from gloomy. Research by commercial property developer Prologis revealed an additional Euro 1 billion spent online results in an extra 770,000 square feet of required warehouse space.
This article was first published in the July 2020 issue of Logistics Insight, subscribe to the magazine by clicking here.
LondonMetric Property is one firm that is doing well, announcing a trading update on rent collection, guidance on the first quarterly dividend and completion of previously announced disposals totalling £54.5 million. In respect of advance rental payments due up to 24 June 2020, the company reports that 95% has been collected or is being collected monthly, a further 3% is expected to be received imminently and the remaining 2% is in discussions, less than half of which is expected to be forgiven. In light of the strong rent collection and in line with its progressive dividend policy, the company intends to increase its first quarterly dividend for the financial year ending 31 March 2021.
W. P. Carey, a leading net lease real estate investment trust company specialising in corporate sale-leasebacks, build-to-suits and the acquisition of single-tenant net lease properties, has announced six investments completed during the 2019 fourth quarter totalling approximately €253 million ($282 million) and more than 251,000 square metres (2.7 million square feet). The investments are located in the U.S. and Europe and are diversified across property types. The properties are triple-net leased to industry-leading tenants with a weighted-average lease term of approximately 20 years.
Availability for industrial warehousing along the M1 corridor is set to increase as work on a new 125,000 sq ft distribution unit at Barnsley starts this month. Bramall Properties will begin the speculative building of Maple125 at Junction 36 in the third week of July at Maple Road in Tankersley, J36 M1. The build, due to be completed in Q1 2021, will provide much needed speculative development on the M1 corridor between Sheffield and Leeds.In the current uncertain environment, many logistics businesses are looking for sources of capital to bolster their finances. Some are accessing the capital markets; others are turning to banks. A third option to access finance is a sale-leaseback transaction. Under a sale-leaseback, a company sells its real estate to an investor for cash, and simultaneously enters into a long-term lease for the asset. In doing so, the company extracts 100 percent of the property’s value and converts an otherwise illiquid asset into liquid capital, while maintaining full operational control of its premises.
The built environment is one of the worst contributors to climate change, responsible for almost 40 per cent of the world’s total of energy and process-related emissions. The industry has set the wheels in motion to bring this figure down and reach net carbon zero by 2050.
Despite the challenges, one has to remember that online shopping is set to keep growing in the next few years which can only increase the demand for warehouse space.