The property company British Land, the owner of shopping centres including Sheffield’s Meadowhall, has announced a multimillion-pound plan to turn car parks and empty shopping centres into urban distribution hubs for online shopping and same-day grocery delivery services.
The firm put the total value of its pipeline of urban logistics properties at £600m, and said it had spent £189m on assets with “urban logistics potential”, including in central London. It is aiming to buy more warehouses, and add extra floors to existing warehouses, to rent out to retailers wanting to deliver goods quickly to shoppers in the capital.
The popularity of online shopping soared during the coronavirus pandemic, when many shops remained closed for several months during successive lockdowns. In recent months in cities around the UK, there has been a flood of new ultra-fast grocery delivery firms entering the market – including Getir, Gorillas and Weezy – which promise to bring supplies to your front door in minutes and which have attracted billions from investors.
British Land said it had bought sites including an £87m warehouse at Heritage House in Enfield, close to the M25 motorway, and a £20m underground car park in Finsbury Square in central London.
It will add an extra floor to the Enfield space, which is currently fully let to tenants including the supermarket Waitrose.
The Finsbury Square car park will be transformed into a logistics hub to serve the City of London.
Space needed for distribution centres in the capital is in short supply, according to British Land’s chief executive, Simon Carter, with the firm is looking to redevelop existing sites to meet this growing need.
“This specific part of the market, where customer requirements are evolving rapidly and demand is strong but supply of the right kind of space is highly constrained, will require innovative solutions to increase density and repurpose space in central London,” Carter said.
Amid its shift in strategy, British Land returned to half-year profit in the six months to 30 September, as the easing of Covid restrictions at the shops and offices that occupy its buildings allowed it to collect almost all rent due from retail tenants, and 100% of office rent. It reported £370m profit after tax for the period compared with a loss of £730m a year earlier.
Companies are once again looking at renting office space as their staff return to their desks, Carter said, making “occupiers more confident of committing to space”.
One of its newest office developments, at 1 Broadgate in the City of London, has been fully pre-let to tenants or is under offer.