Urban warehouses account for two thirds of Segro’s portfolio.
Segro received a boost from the COVID-19 pandemic restrictions. There were two main drivers for Segro’s outperformance: stronger demand for data centres and e-commerce.
Large data centres were needed to support working from home and video streaming. At the height of lockdown restrictions, only essential shops were open. All other retailers had to rapidly move online and required the warehouses and logistics capabilities that Segro offered. Segro is taking advantage of its time in the sun and raised capital this year to further invest in the “last mile” strategy of providing easy access into large cities.
Although Segro has many tail winds, its fortunes are still tied to the performance of the online retail sector. This pandemic has far reaching consequences including a likely hit to consumers’ disposable income which, in turn, could render Segro’s tenants less able to pay rents.