While the logistics industry certainly didn’t dodge the economic bullet when the meltdown started in 2008, it has shown itself to be a resilient player. And at least one property fund manager is prepared to invest some serious money into an emerging sector – the big box logistics space.
Superstores have dominated the general retail space since the 1960s, with names such as Tesco, Asda and Sainsbury’s enjoying such huge turnovers that they’ve been free to diversify widely, from personal finance to mobile phone networks and beyond. But another important development has been online retail, which has profoundly affected the supermarkets. Not only are they pushing their own online shopping experiences, they are also facing online competition for items that customers would have walked into their shops for. All this is leading to megastores with large areas of potentially wasted floor space.
Step up Tritax Big Box REIT, the real estate investment trust that’s aiming to use this growing space as an investment opportunity. The company will be issuing shares on the London and the Channel Islands Stock Exchanges and they are confident enough of its success to obtain a £150m senior debt commitment from Barclays.
Tritax will be mainly focused on London and the surrounding area, where they have identified the greatest need and the potential for the best returns on investments. They’ll also restrict themselves to properties of 500,000 square feet or more that are on minimum 12-year leases. The company’s performance on the stock exchange will be a good indicator of the confidence investors are experiencing on the recovery.
Retail space isn’t the only target for Tritax, but it is looking like an area that is certain to be opening up new opportunities for a logistics and distribution industry that’s beginning to struggle to meet demand through lack of space in the capital.