Scroll to the top
More Websites

The modern logistics market is still in its relative infancy. Powerful long-term structural change underpins demand for our assets.

During the Covid-19 pandemic, the extent to which logistics is critical element of the UK’s infrastructure became increasingly evident. These modern, large-scale distribution assets continue to play an integral role in supporting many industries and underpinning the UK’s economic output.

Our strategy is aligned with three long-term structural trends, including the relentless growth in e-commerce sales and occupiers need to optimise operational efficiencies. These trends are expected to increase and sustain demand for logistics real estate in the UK.

1. The ongoing growth in e-commerce

Consumers have continued to demand faster and more convenient ways to buy and receive goods, leading to an increasingly complicated omnichannel supply chain network and a rapid rise in online shopping over recent years. Suppliers have responded by improving e-commerce channels through their supply chains.

The pandemic accelerated this trend in 2020. While instore sales partially recovered as lockdowns were eased, online sales represented 28% of total retail sales during 2020 increasing from 19% in 2019. With many of the population forced to shop online for the first time, it is expected that much of this increase will remain in place, and there remains considerable scope for further growth. Over the last four years, every £1 billion of additional online sales has resulted in demand for new logistics property averaging nearly 900,000 sq ft pa. There has been no evidence that this relationship has changed as the pandemic has evolved. The Group’s development pipeline is attractively placed to allow us to support our customers in fulfilling this increasing level of demand.

2. The need to drive productivity and reduce costs

Even prior to the pandemic, corporate profit margins were under pressure from cost and wage inflation. The economic fallout from Covid-19 has only intensified the pressure on profitability. To avoid passing higher costs to consumers, companies are looking to lower their unit cost by any means available, including making their distribution activities as efficient as possible.

Modern Big Boxes typically use high levels of automation and technology to stock and retrieve products rapidly and efficiently. Such systems are vital to handling large volumes of complex omni-channel orders and returns, and are typically only found in larger, modern logistics buildings. The occupier’s investment in such systems can exceed the cost of the building itself, meaning that occupiers are willing to sign long leases to protect their outlay. Automation has proved beneficial during the pandemic, supporting occupiers’ ability to meet rapid growth in online sales and helping to maintain effective social distancing when moving product. This enabled highly automated buildings to remain operational throughout the worst of the pandemic. In addition, automation could help the cost effectiveness of shifting supply chains closer to domestic markets.

3. The need to generate efficiencies, increase resilience and sustainability

In addition to the benefits of automation, Big Boxes enable occupiers to consolidate smaller, disparate units into a single large property, which can act as a regional or national distribution centre. This offers economies of scale and allows occupiers to optimise their staff and stock management. Modern Big Boxes also have greater energy efficiency and the potential to install substantial renewable power generation, reducing costs and enhancing the occupier’s sustainability performance. The pandemic has also highlighted the potential for supply chains to be interrupted or slowed. For occupiers importing goods from the EU, the re-introduction of checks at UK ports may also slow the flow of goods. Both these factors are encouraging occupiers to manufacture more in the UK and/or to hold more stock domestically, increasing the amount of space they require. This builds on the trend of de-globalisation and the unwinding of complex and long supply chains.

Attractive market fundamentals

Despite strong occupational demand, the supply of prime, large-scale logistics assets remains constrained. Land which can accommodate Big Boxes is scarce in key locations. The scale of Big Boxes and the traffic movements they generate can present planning challenges and it can take years to achieve the required consents. Big Boxes also require a large local labour pool, as they can employ more than 3,500 people during peak periods. They also have substantial power and infrastructure requirements, adding further complexity to site identification and delivery.

Occupiers looking for a suitable building may therefore need to pre-let an asset either prior to or in the course of development, creating opportunities for investors to forward fund these developments and obtain brand new assets on long leases to high-quality tenants.

A demand and supply imbalance favouring owners of logistics assets create attractive features in our market, including longer leases and the potential for rental growth.

Long-term positive structural drivers make logistics real estate an attractive and growing sector.

Colin Godfrey - CEO, Fund Management

We are well positioned to maximise our sector’s potential

As the UK’s largest investor in large-scale logistics warehouses and owner of the UK’s largest logistics focused land-portfolio, we are well positioned to capitalise on the opportunity that the big box logistics market has to offer. Our established portfolio gives us insight into our customers and their business plans, as well as the logistics market as a whole. This helps us to work with our customers to support their growth objectives, including through our development projects.

Our leading, sector specific expertise delivers value

Our Investment Manager, Tritax Group, is a sector specialist. We benefit significantly from the Manager’s culture, strategic thinking, expertise and extensive network of industry contacts, which enable us to capitalise on the opportunity that our sector offers.

We own an unrivalled investment portfolio

We have built a unique and modern portfolio let on long leases to some of the world’s biggest names in logistics, manufacturing, retail and e-commerce. Our long leases and high-quality customers provide income resilience with in-built predictable rental growth. Our portfolio’s strong underlying fundamentals and active asset management position us for long-term sustainable performance.

We have secured our future development pipeline

We control one of the UK’s largest and most geographically diverse portfolios of land and options over land, for developing logistics assets. This active Strategic Land Platform is a strong source of future value growth that underpins earnings growth, delivering new sustainable buildings on a largely pre-let basis, that meet the requirements of occupiers whilst delivering attractive risk-adjusted returns to shareholders.

Leading portfolio
Learn more about our portfolio of large-scale logistics assets and our development land-platform.
Compelling strategy
See how we maximise the opportunities our market presents