Segro: Capital Growth set to Fuel Data Centre Expansion

Segro currently owns and manages industrial and logistics space in Europe that covers 10.4 million square metres of space (Image: Segro)
After raising more than US$1bn in new shares, Segro is looking to expand its data centre portfolio across the UK and Europe and could build multiple sites

UK-based real estate investment trust (REIT) Segro could be set to develop multiple new data centres across the UK and Europe.

The organisation recently raised £900m (US$1.14bn), having issued 110 million new shares, due to positive feedback from investors. In light of this, Segro is keen to develop its data centre portfolio and notes in a statement that it could build up to 24 data centres with 1.2 GW of IT capacity - both new sites and redeveloping existing facilities.

Currently, the majority of Segro’s business is in warehousing, which it is trying to make more sustainable.

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Capitalising on an ever-expanding data centre market

The data centre market is currently undergoing significant transformation, as customer demand increases the pressure on relevant businesses to deliver data and services. 

In fact, the increased need for data centres across Europe resulted in record-level demand in 2023 and is expected to triple in size across the EMEA region by 2023, according to a report by JLL. As a result, Segro is seeing that this growth will create an increased need for warehouse space, as data centres seek to optimise their supply chains to lower costs, improve customer service and focus more on sustainability.

Segro’s report suggests that the sites within its proposed land bank could triple the current £50m (US$63.12bn) of headline rent currently attributed to the data centre sector. Given that the data centre industry is seeing booming growth, particularly from the rise of artificial intelligence (AI), Segro claims that it is in a strong position to capitalise on these digital trends. This is due to its well-located land and ongoing site redevelopments, including a retail park in Slough that it views as a potential future data centre hub.

As part of these efforts to expand across the UK and Europe, Segro is aiming to invest approximately £600m (US$757.27m) on redevelopment and infrastructure in 2024 and 2025. This figure will remain flexible, according to the company, in order to best respond to demand.

“We appreciate the support from our investor base for this equity placing and the confidence it demonstrates in our business,” says David Sleath, Segro CEO. “In addition to the profitable growth opportunities within our development pipeline, we expect further exciting opportunities to emerge in the coming months which this additional capital will help us to deliver.”

Investing in local communities

Segro currently owns and manages industrial and logistics space in Europe that covers 10.4 million square metres of space. At the end of December 2023, the company’s total space was valued at £20.7bn (US$26.1bn) - two-thirds of which comprises urban warehouses and data centres in and around major European cities.

This type of modern warehouse space is vital to growing populations and their digital economies, according to Segro. Its remaining portfolio consists of large warehouses that are located at key logistics hubs and predominantly used for large-scale centralised distribution and fulfilment.

In February 2024, the company confirmed a lease with leading logistics company Yusen Logistics UK on a site that is understood to be the largest warehouse in the Midlands, UK. In line with this, Segro will work to implement a series of programmes to support the local community and help deliver long-term economic and social benefits to the region.

According to Sleath, the company has also made significant progress in its decarbonisation goals.

“We’re tracking well ahead of our previous targets, in terms of the embodied carbon reduction from our development programme and capturing and recording customer and corporate emissions,” he says.

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