WATCH: This Interactive Chart Shows How Industrial Property Took Over The Stock Market
If you needed any help visualising just how thoroughly logistics property has eclipsed other real estate sectors, then the dynamic chart below should do the trick.
Using data from Green Street, Bisnow has created a data visualisation showing how the market capitalisations of the UK’s largest listed property companies have waxed and waned since 2010.
In 2010, the rise of e-commerce was already well underway. Amazon was more than a decade old and the iPhone had been released three years earlier, making it easy to buy what we wanted through our phones.
But at that point, industrial and logistics specialist Segro was still less than half the size of the two companies that had been the largest in the UK for decades, Landsec followed by British Land. It was also significantly smaller than retail REIT Hammerson.
Pan-European office and retail giant Unibail was almost twice the size of any UK-listed company.
In the years that followed, Segro grew, but on a relative basis it actually slipped down the league table. Until 2015, it was smaller than London office specialist Derwent and Covent Garden owner Capco.
At that point, however, Segro started to move its way through the field. In 2017 it overtook Hammerson as the third-largest UK REIT. In 2018, it passed British Land, and in 2019, it toppled the historic leader, Landsec.
When the pandemic hit in 2020, the company streaked away, its market capital almost doubling in the following two years, as investors looked for sectors that provided the prospect of growth, avoided anything to do with retail, and weren't dependent on the future of offices.
Segro overtook Unibail, and now sits behind only German residential giant Vonovia in the rankings of European-listed property companies. It is as big as Landsec, BL, Derwent and Hammerson combined.
The data visualisation also highlights how Tritax Big Box REIT, which began life only in 2015, is now close to overtaking British Land as the UK’s second-largest REIT. The rise of alternative sectors is highlighted in the fact that student accommodation specialist Unite is not far behind.
For Segro and Tritax, there is no need to alter strategy in a world where e-commerce penetration is predicted to continue to grow.
For the big beasts, Landsec and British Land, things are not so simple. Of course, being the biggest is not in itself important. But their decline highlights their need to convince stock market investors they have a role to play as listed companies.
Both have looked to expand beyond their previous strategy of focusing on London offices and large regional shopping centres.
British Land is moving into urban logistics and life sciences, and major mixed-use developments, like its scheme at Canada Water in south east London.
Landsec is selling London offices and reinvesting in major mixed-use redevelopment schemes, the first two of which are in Manchester, beyond its traditional heartland.
“There has been a lot of soul-searching among the buy-side community about whether they want to own shares in these companies,” Green Street Head of European Research Peter Papadakos said. “Out of a list of 40 or 50 listed property companies, what is it about them that would make you want to own them?”
Papadakos said it can be difficult for shareholders to price in the potential upside of development projects that can take five to 10 years or more to come to fruition.
“There is a bit of scepticism about diversified companies,” he said. “They’re not specialists, so don’t have a competitive advantage in any particular sector.”