Blackstone Group Inc. has agreed to buy St. Modwen Properties Plc in a bid that values the British developer at about 1.2 billion pounds ($1.7 billion).

The purchase will give the private equity giant a bigger slice of the U.K.’s warehouse market. Blackstone is offering 542 pence per share in cash, according to a statement Thursday. Blackstone announced the bid earlier this month and St. Modwen had indicated it would accept the offer.

Competition for warehouses across Europe has intensified as global investors including Goldman Sachs Group Inc., Cerberus Capital Management LP and GIC Pte bet on rising rental income after the pandemic prompted more people to shift their shopping online. With U.K. warehouse lease agreements reaching a record in the first quarter, according to CBRE Group Inc., the asset class is outperforming any other type of commercial property.

Blackstone has been racing to scale up its Mileway unit that focuses on urban warehouse properties close to population centers that are in demand from online retailers seeking to cut delivery times. Recent U.K. deals include the purchase of a 473 million pound portfolio from Prologis Inc. in October and a 118.5 million pound deal for the Bedfont Logistics Park in March.

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