Shares in warehouse landlord Segro (SGRO) climb 2.5% to 428.7p as the strategy to modernise the company's portfolio gathers pace. The £3.2 billion cap has struck a deal with Hermes Property Unit Trust to add a 9,800 square foot distribution warehouse in Hayes, West London to its portfolio.

Segro is paying a headline £21.9 million for the warehouse, although the company will actually bank £25.1 million payment itself from Hermes, which is taking a pair of industrial estates of egro's hands in a separate £47 million deal.

Segro’s new asset is let to Allport Cargo Services until 2026, generating 4.9% of the acquisition price in rent each year.

A rent review in March 2016 is unlikely to be an issue due to a lack of industrial space in Southern England.

This is one of the reasons why industrial property is predicted to generate attractive total returns of 9.5% on average in each of the next five years, despite growth for commercial real estate overall slowing.

Web - Segro - 15 December 2015

An improving economy and the growth in online shopping are also factors in the sub-sector’s growth, according to real estate adviser CBRE.

The firm forecasts that a record £70 billion will be invested in UK commercial property in 2016. It appears that industrial property is set to be one of the winners.

Issue Date: 15 Dec 2015