SEGRO added £10.6m to its rent roll in the three months to the end of September, its strongest quarterly performance for three years.
The industrial giant’s vacancy rate dipped from 7.4% in June to 6.6% at the end of Q3 after £2.3m of lettings absorbed existing space, with the remainder of the recently contracted lettings on new space.
Lettings on speculative development accounted for £1m of the rent roll increase.
Rental levels in the first nine months of the year have risen 3% in the UK and 1.4% in continental Europe, SEGRO said, with declines in central Europe dragging down the European portfolio performance.
Chief executive David Sleath said the strong UK occupational market meant the company was “optimistic” about full-year performance.
The ongoing yield compression triggered by investor interest in the sector would be positive for the company’s portfolio valuation, but meant it would “remain deliberately selective about acquisition opportunities, whilst continuing to focus on development”, he added.
SEGRO approved a further 1.3m sq ft of development in the third quarter, just over half of which is prelet. New developments include a major speculative scheme in Rugby.
In total it has well over 4m sq ft of space under construction, just under half of which has been pre-let.
SEGRO spent £31m on land in the quarter and £71m on investment acquisitions at a blended yield of 6%.
It sold £76m in the period at a blended topped-up yield of 6.6%.
It is currently also marketing for the sale its portfolio of offices on the Bath Road in Slough, Berkshire.
