Segro seeks planning permission for lucrative data centre joint venture
Property developer Segro is betting on data centres to power returns next year and beyond, as the AI revolution supercharges demand for critical infrastructure.
Segro – which is structured as a real estate investment trust – on Tuesday confirmed it would apply for planning permission for a ‘fully fitted’ data centre joint venture project ‘in the coming weeks’.
The group, once Britain’s biggest landlord, currently has 34 ‘powered shell’ data centres in its heartland of Slough and London, where tech giant customers such as Amazon equip themselves in return for a lower rent.
The other assets of the £8.6billion FTSE 100-listed REIT are mostly urban or ‘big box’ warehouses, which saw booming demand in the wake of the pandemic.
Segro boss David Sleath said the group is also ‘progressing multiple negotiations on both powered shells and new fully fitted opportunities in the UK and Continental Europe’.
Equinix operates a large campus of data centers on the Segro Slough Trading Estate, which Segro owns
Consultancy group McKinsey estimates $7trillion (£5.2trillion) will be spent on data centre projects by 2030.
Segro has invested £286million across its portfolio so far in 2025, with a total of £400million set to be allocated over the full year.
Investments in the third quarter saw Segro add 34,800sqm of new space, bringing in an a £8 million of headline rent, including the completion of its latest powered shell data centre on the Slough Trading Estate.
The group also added extra capacity to its land-enabled power bank, including 190MVA of additional power reserved in a key London Availability Zone.
‘Our flexibility to offer both powered shell and fully fitted data centres in Europe’s prime data centre markets means that this power bank offers significant value creation opportunity,’ it said.
It came as Segro said it signed £22million of new leases in the quarter, well ahead of last year but keeping this year’s total of £53million around 17 per cent behind 2024 levels at this stage.
Segro signed £7million of pre-let deals, compared to £3million in the first half, and the group has £45million of future rent either under construction or in advanced negotiations.
This has pushed its average development yield – the difference between projected net operating income and total development cost – from 5.4 to 7 per cent.
Sleath said: ‘These factors give us confidence in our ability to capture the embedded growth potential in our existing portfolio and build out our exceptional landbank, which provide the opportunity to double our rent roll.
‘This will support the delivery of further compound growth in earnings and dividends, with significant further value creation upside from our growing data centre pipeline.’
Segro shares were up 2.9 per cent at 692.2p by midmorning on Tuesday, bringing performance to par for the year so far.
Oli Creasey, head of property research at Quilter Cheviot, said: ‘The industrial/logistics market has settled down post-pandemic, but that isn’t to say that demand has fallen particularly.
‘Data Centres look likely to be the next leg of the strategy for industrial assets, and landlords (and investors) are looking for exposure to the sub-sector through any means possible.
‘Segro is well-placed to take part in this new wave of demand, albeit traditional industrial and logistics is likely to remain the largest part of the company’s portfolio for some time to come.’
Adam Vettese, market analyst at eToro, added: ‘[Segro’s] data centre strategy is emerging as a powerful growth driver, with new pre lets helping deliver the most productive quarter of development since early 2024 and capacity expansion in key markets like London.
‘If execution on the data centre pipeline continues and financing costs ease further, the medium-term trajectory should point higher, with analyst targets near 780p offering potential upside as confidence returns to the property sector.’
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