Tritax Big Box has said it will benefit from the headwinds afflicting other parts of the economy.
The REIT, which published its interim results this morning, said high inflation and the cost-of-living crisis had “intensified the need for companies to win market share, grow revenue and protect margins”.
It said this was translating to a need to optimise supply chains, in part by consolidating “older disparate units into larger distribution centres”, especially those with higher levels of automation.
“Events such as Covid-19, Brexit and the war in Ukraine have also highlighted the risks to long supply chains,” it added. “Customers are responding by increasing their inventory on-shore and/or reviewing every aspect of their supply chain from manufacturing and transportation to storage. This has increased demand for high-quality logistics space closer to the end consumer.”
Tritax chairman Aubrey Adams added: “We continue to see strong occupier demand for space although inflation and geopolitical issues have made the economic environment more uncertain.
“We benefit from a combination of high-quality investment assets which provide the business with a strong base of secure, long-term income and attractive rental growth potential, driven by a favourable structural supply/demand imbalance in our market.”
The REIT said its portfolio had risen in value by 10% to £6.03bn in the first half of the year, driven by development gains, asset management and strong underlying market conditions. The portfolio has no vacancy, with 100% of rents collected.
The results also boasted a record 2.4m sq ft of development lettings, which increased contracted annual rent by £17.8m or 9.1%.
Some 2.2m sq ft of construction was started over the period, with the REIT on track to deliver between 3m and 4m sqft by the end of 2022.
The current development pipeline under construction (includes 2021 starts) totals 3.4m sq ft, of which just over half has been prelet or let during construction. A further 15% is under offer.
The REIT’s future development pipeline totals 1,291 acres, with the potential to support up to 26.3m sq ft of development. Tritax operates a capital-light model, with most of its landbank held on long-term options.
Adams said: “We have delivered another strong first half, with good operational and financial performance and excellent progress within our accelerated development programme, which continues to gather momentum.
“Long-term structural drivers, and existing favourable market dynamics, are generating strong occupier interest in both our standing investment portfolio and in the new space we are creating through our development activity.
“We are well positioned to continue delivering attractive and resilient performance over the longer term.”
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