British Land is buying up retail parks and warehouses in a bet that the online shopping boom stoked by coronavirus will continue, as the company diversifies away from shopping centres and older offices.
The FTSE 100 company has sold off £1.2bn worth of offices, supermarkets and shopping centres over the past year, equivalent to more than 10 per cent of its portfolio. Under new boss Simon Carter, British Land is reinvesting that cash in areas it has singled out as post-pandemic winners: urban logistics, out-of-town retail parks and high-spec London offices.
British Land, one of the UK’s largest office landlords and owner of the Broadgate estate in London, recently acquired a £49m retail park in Bedfordshire, invested in a unit trust covering another 10 parks and is on the hunt for more, it said in Wednesday’s statement.
The property company has also bought an £87m warehouse in Enfield and is seeking to develop its existing land into more urban logistics space.
Carter said both sectors would continue to benefit as more shoppers moved online, increasing demand for the click and collect services that are popular at retail parks and for warehousing to store goods.
British Land is also shuffling its office portfolio, selling older assets and investing in new development, which Carter believed would remain in demand despite questions around the future of work.
After selling a stake in three West End offices worth more than £400m in December, the company is ploughing cash into new office developments on its London campuses at Broadgate, Norton Folgate and Canada Water.
“The bulk of demand is for new or nearly new space, particularly with good sustainability credentials,” said Carter, adding that a number of prospective tenants were looking to consolidate a patchwork of offices into one high quality headquarters.
This month British Land signed up property company JLL as a tenant for its unfinished office development at 1 Broadgate.
In a trading update on Wednesday, the company said retailers on its estate paid 70 per cent of what they owed in rent last year, as stores and outlets were forced to close in lockdowns. Office tenants fared better, paying close to full rent.
“Their office portfolio over the last 12 months has been really strong,” said Colm Lauder, an analyst at Goodbody, who added that “there has been a definite tick up in optimism in the last month or two” thanks to the gradual reopening of businesses.
Great Portland Estates, a London office specialist landlord, said on Wednesday that it had collected 82 per cent of the rent it was owed for the current quarter, which runs from March — an improvement on the previous four quarterly collection rates.
“The ongoing vaccination programme and government road map to easing lockdown restrictions is supporting renewed optimism, which we are seeing reflected in improved rent collection, greater letting activity and increased enquiry levels on available space,” said Toby Courtauld, Great Portland Estate’s chief executive.