Strategic Report Our Marketplace continued
Throughout the year the acceleration in structural changeswithin themain property sectors has contributed to increased polarisationof performance .
Industrial market trends
What thismeans for Picton ӱ The accelerated structural shift towards online retail, growth in delivery apps and increased expectation for shorter delivery times mean industrial property continues to remain in demand. The portfolio is well positioned by being overweight to the industrial sector. ӱ Our occupier focused approach has enabled us to capitalise on strong demand for industrial property and grow ERVs through new lettings, renewals and rent reviews. Our response to these trends ӱ We will continue to capture rental growth through new lettings and proactive portfolio management. ӱ We will strategically maintain our overweight position to the sector. ӱ We will continue to acquire complementary assets where possible, whilst remaining selective given the recent increase in pricing. ӱ We envisage only limited and selective disposals. 2020 was a strong year for the industrial sector, which saw high levels of occupational demand, particularly for logistics units, as retailers and third- party logistics companies invested in fulfilment of online orders in response to the pandemic. The proportion of retail spend online reached a record high and is not expected to revert to pre-pandemic levels. Last mile logistics requirements have sustained upward pressure on rents, particularly in urban locations. The sector is also experiencing strong investor demand, with capital values increasing 9.6% in the year to March 2021. The industrial sector accounted for 29% of total investment volumes at a value of £12 billion. There is strong competition to invest in industrial assets which has driven yields down. The outlook for the industrial sector is a continuation of these trends. Standard industrial units in London and the South East are forecast to be amongst the top performing sub-sectors in the short to medium-term.
The industrial sector has benefitted from the increase in online consumer spending to the detriment of bricks and mortar retail, whilst enforced working from home is likely to lead to a longer-term shift towards a more hybrid model of home and office-based working. Our Covid-19 response
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