SEGRO contracted £16.3m of new rent in the first quarter of the year, up from £8.6m in the same period last year.
In its latest trading update the group said the new rent included £10.6m of pre-lets, up three fold from the 2016 figure.
The vacancy rate remained low at 5.6% (31 December 2016: 5.7%), mainly reflecting the impact of acquisitions and disposals (+0.3%), offset by development lettings (-0.3%) and by net take-up of existing space (-0.1%).
During the period 344,448 sq ft of speculative developments were completed, capable of generating £1.6m in rent when fully let.
The company also approved or commenced the development of 3.1m sq ft of space. These projects represented £13.6m of potential rent, of which 76% is pre-let.
David Sleath, chief executive of SEGRO, said: “SEGRO has had an excellent start to 2017. We have signed £16m of new headline rent, including almost £11m of pre-let agreements relating to 3.2m sq ft of new projects, which have been approved or are underway. We were delighted to acquire full ownership of our Heathrow assets during the quarter and with the shareholder support for the associated rights issue, which also secured the necessary funding for our high quality development pipeline.
“Investor demand for warehouse and industrial assets remains strong across our markets and this may lead to further yield compression and capital growth in the first half of the year.”
At 31 March 2017, 8.6m sq ft of new space was approved or under development, of which 68% is pre-let. These projects equate to potential rent of £39m, reflecting a projected yield of around 8%.
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