First it was beds, and now it is sheds, as high street retailer The John Lewis Partnership transforms itself to meet post-pandemic needs.

The business has signed up for an extra 1M SF of warehousing in Milton Keynes as it rapidly expands its online offer. Since the start of the coronavirus pandemic, online sales have grown from 40% to over 60% of John Lewis’ total sales.

The deal, with supermarket giant Tesco, will see John Lewis take the Fenny Lock warehouse on an 11-year lease.

The depot adds to the 2M SF of warehousing John Lewis already operates at nearby Magna Park, Milton Keynes.

The move is part of a copycat strategy in which John Lewis is launching in the beds-and-sheds sector made popular by developers like St Modwen and Harworth.

The business revealed plans in June to build up to 7,000 build-to-rent homes on parts of its department stores, on carparks, on top of Waitrose supermarkets or next to its warehouses. A further 3,000 homes could be built on other brownfield land holders.

The £1.8B pipeline is almost certain to require a development partner if it is to be delivered, given the high cost of building in London and the South East and the need to keep adequate cash reserves and lines of credit to ride out further retail sector turbulence.

The company said in a statement on its BTR ambitions that it would build units ranging from studio flats to four-bedroom houses. Renters would be able to lease the units unfurnished or fully kitted out with John Lewis furniture.

The new warehouse deal is likely to be a quicker cash generator and will be in operation by summer 2022.

“We will use the Fenny Lock site to fulfil customer orders for fashion, small home furnishing items and technology products. The proximity to our Magna Park campus will enable us to combine more customer orders, reducing both the number of packages we create by approximately one million per year, and the number of lorries on the road,” John Lewis Executive Director of Operations Andrew Murphy said in a statement.

In a separate deal, John Lewis has signed a three-year lease agreement for a 300K SF distribution centre at Bardon, Leicestershire. The site will be operated by Clipper Logistics and will be operational in time for Black Friday.

The letting could inspire investment activity. Last year the £110M disposal of the 669K SF MP2 John Lewis warehouse at Magna Park to Deka Immobilien achieved  a sub-3.75% net initial yield, a new benchmark for non-investment-grade credit.