Tritax Big Box (BBOX ) has signed one of the largest lettings contracts in the UK so far this year, leasing 1m square feet of logistics property in Rugby.

The £3.6bn portfolio of warehouse real estate has once again shown demand for industrial space, which supports the online shopping boom, as it signed the bumper leasing agreement for four newly-built facilities in its Symmetry Park Rugby site.

The London-listed fund said it was one of the biggest property contracts to be agreed this year, which may allay investor concerns about a slowdown in the sector after Amazon’s recent warning that it has excess warehouse capacity. 

Of the four buildings being occupied, two are from a speculative development programme while the other two are pre-lets due to be constructed on a built-to-suit basis. All will be let on 15-year leases with open market rent reviews every five years, with the tenant described as a ‘global leader in storage and information management services’.

The real estate investment trust (Reit) said the facilities will ‘support our new customer’s growth ambitions by enabling it to create its first UK campus, capable of delivering a full range of services for its client’.

The FTSE 250 closed-end fund, which moved into warehouse development in 2018, said its new facility will be ‘state-of-the-art’ with a slew of green credentials, including a target EPC A-rating, 20% of the roof covered in solar panels, and a net-zero construction target.

The delivery of the buildings will be phased, with 321,000 square feet slated to complete in the second quarter of 2023 and the remainder in late 2023.

The trust said the development site in Rugby benefits from planning consent to deliver 1.9m square feet of logistics space and ‘access to key transport infrastructure’.

Colin Godfrey, the Reit’s chief executive, said investors will enjoy a yield on cost of between 6-8%.

‘Our successful letting of 1m square feet of prime logistics space will be one of the largest UK lettings transactions completed so far this year and is further evidence of our strategy delivering growing rental income to our investors at an attractive yield on cost,’ he said.

Godfrey added that the fund’s development arm ‘continues to gather momentum’ and the ‘significant land portfolio allows us to carefully match customers’ requirements in terms of building size, location, and configuration’.

In its first quarter update, the fund said it had enjoyed ‘near record levels of demand from a range of occupier types’ and leased 10.4m square feet in the first three months of the year, up 102% on the same period in 2021.

While vacancy rates of just 1.6% are encouraging for occupiers, warehouse developers and owners were hit last month as e-commerce giant Amazon – Tritax’s largest tenant – warned it had excess capacity after significantly expanding its logistics footprint during the pandemic. Taken as a signal that the online shopping boom is waning, the news wiped billions off warehouse market values. 

Tritax’s shares were sent sliding, closing yesterday at a 21% discount to net asset value, versus a 15% average premium over the last 12 months, according to broker Numis. 

Despite that hit, shareholders have still enjoyed a 48% total return over the last five years, compared to the FTSE EPRA UK index’s 6.8% rise.