Landsec swings to profit as London rents rise and shops get bigger

Commercial property giant Landsec has returned to an annual profit after benefiting from rising rents and retail chains investing in their biggest shops.

The company shrugged off any impact of US tariffs on business investment.

Landsec reported a pre-tax profit of £393 million for the year to the end of March, rebounding from a loss of £341 million the year prior.

The total value of its property portfolio jumped to £10.88 billion, from £9.96 billion this time last year.

Landsec’s portfolio includes office space, retail destinations and landmarks such as the White Rose shopping centre in Leeds, the Bluewater shopping centre in Kent, and the Piccadilly Lights in London.

The London-listed company said demand for "modern, sustainable office space" in London remained strong, and that brands continue to focus on "fewer, but bigger and better stores in key locations".

"As supply of both is constrained, rents in our portfolio continue to grow," it told investors on Friday.

For example, it pointed to retail giant NEXT tripling the size of its Bluewater store, Primark doubling the size of its shop in White Rose, and new openings in shopping centres such as Bershka, Pull&Bear, and JD Sports.

The top 1% of all shopping destinations in the UK provide brands with access to 30% of all retail spending in stores, according to Landsec, which said that nearly 90% of its retail assets were in that top bracket.

The company plans to ramp up investment in popular retail destinations by £1 billion over the next one to three years.

It told investors that if brands were feeling squeezed by higher national insurance contributions, or wider economic uncertainty, then that would serve to sharpen the focus on their best stores – and "put more pressure on the tail-end" of their chains.

Furthermore, it said uncertainty caused by Donald Trump’s new tariffs on US imports was not yet having any noticeable impact on demand among its customers or on the investment market.

"Owning the right real estate has never been more important and, with a very healthy pipeline of occupier demand, this trend looks set to continue," CEO Mark Allan said.