LONDON — A new property investment vehicle is aiming to tap into the booming popularity of online shopping by investing in the “urban warehouses” used to deliver goods to people in cities.
Warehouse REIT, a newly formed investment company, announced on Monday plans to raise £150 million listing on London’s AIM stock market.
Most of the funds will be used to buy 27 warehouses across the UK for £108.8 million. The storage sites are currently being used by companies like Boots, Amazon, Asda, and Argos.
Traditionally, warehouses were based in out-of-town locations and would be used to hold stock that would be used for shops around the country.
However, the rise of online shopping means that retailers are increasingly investing in so-called “last mile” delivery infrastructure, which allows them to deliver an online order to a customer in as little as a few hours. This has led to the rise of so-called urban warehouses, which are located within cities and therefore closer to customers. (You can read more about how e-commerce and the internet is changing retail here.)
Warehouse REIT says in its float document: “In 2007, demand for warehouse accommodation from online retailers accounted for just 1% of the UK take-up but this figure grew to 29% by 2016. The change in the market dynamic is clear, with online sales projected to grow to nearly double by 2021.”
Neil Kirton, non-executive Chairman of Warehouse REIT, said that urban warehouses have been “one of the best performing asset classes in the sector.” Warehouse REIT is promising an annual return of 10% to investors, through a combination of net asset value increase and dividends.
Warehouse REIT has a further £88 million-worth of potential properties it is negotiating on, the company says.