Industrial real estate firm Segro has signed a new lettings agreement with Virtus, and plans to expand its data center business into mainland Europe.
While the company traditionally focused on warehouses and other industrial buildings, Segro owns the Slough Trading Estate in the UK outside London, which is home to dozens of data centers. The company continues to buy up properties in the area to redevelop them for data center customers.
In its most recent results, approximately a quarter of Segro’s take-up for the year so far was from technology, media and telecoms companies, including 17 percent from data center operators, while manufacturing companies accounted for 12 percent of take-up, compared to eight percent in 2021.
David Sleath, chief executive, said: “Our focus on maintaining close relationships with our customers, our well-located land bank and our prudent capital structure, provide significant opportunities for further profitable growth arising from the ongoing structural changes in our customers’ markets.”
In the subsequent earnings call, the company said it had seen lettings transacted with Virtus in Slough and Bosch in Poland in July. Whether the Virtus deal was a new lease for an existing property or for a new facility is unclear. Virtus currently operates four facilities on the Slough Estate, with its newest 13MW London11 facility due to go live this year.
“Data center demand, first of all, very, very strong, quite a high proportion or a large proportion driven by the three main hyperscalers who are very, very active in the market at the moment, but also some very good colocation inquiries as well,” said Andy Gulliford, Segro’s chief operating officer.
The company said it now had more than 30 data centers on the Slough Trading Estate, calling it the ‘absolute epicenter for data centers in the UK.’ It also has a facility in West London and one in Croydon, but is looking to expand into Europe.
“We're really looking at the Continent,” said Gulliford. “We think we've potentially got more opportunity in Tier 2 markets, which are really coming forward.”
“Markets like Madrid, Marseille because you have the link with the African continent coming into Marseille. Also outside Frankfurt in Germany, probably Berlin is the next one.”
Gulliford said the company is looking at acquiring more land in those markets, and will continue to focus on powered shell facilities.
Segro is one of a number of logistics & warehouse industrial real estate firms looking to move into or expand their existing presence in the data center space. The likes of Prologis, GLP, ESR, P3, and others are also looking to develop facilities in the US, Europe, and Asia Pacific.