Clarion Partners has been a leading real estate investment manager for more than 39 years, using the judgment of our experienced pro- fessionals as well as our proprietary research to design real estate investment solutions that create value and have the potential to deliver superior returns. We are distinguished by a performance- driven approach, long-term organisational stability, and a mandate of accountability to our clients.
With $63bn in total assets under management for more than 500 institutional investors around the world, Clarion offers a broad range of equity and debt strategies across the risk/return spectrum – from core/core-plus to value-add/opportunistic. The firm, which is headquartered in New York, has nearly 300 employees and maintains a presence in strategic markets across the United States and in Europe. Our strength lies in a well-established network of experienced profes- sionals who bring deep knowledge of local markets to every investment decision.
As a subsidiary of Clarion Partners, Clarion Partners Europe oper- ates out of offices across Europe, including London, Jersey, Berlin, and Paris. Clarion Partners Europe is supported by Clarion Partners’ scale, infrastructure, expertise, and proprietary research, while operating separately with its own management and investment teams and remaining a truly European business focused exclusively on European logistics assets.
With a 16-year track record acquiring, managing and developing high- quality logistics real estate concentrated around Europe’s largest and strongest markets, Clarion Partners Europe is a partner of choice for businesses of all shapes and sizes requiring industrial space to meet rapidly evolving customer and consumer demand.
INDUSTRIAL: Pan-European Logistics Sector Outlook – Omnichannel retail continues to drive rapid transformation in worldwide supply chains and logistics real estate alongside rising global trade. Recently, the global COVID -19 pandemic has dramatically accelerated e-commerce penetration rates and sales growth. Throughout much of Europe and the United States, e-commerce as a percentage of total core retail sales grew to approximately 20% in 2020. Globally, the e-commerce market share could rise to almost 25% by 2023 (or even 45% by 2030), as online sales have continued to grow at a double-digit rate. Thus, demand for industrial property is expected to remain strong in the years ahead.
Clarion Partners believes that the future expansion of global logistics real estate will be especially robust in Europe, given that institutional-quality property markets there are less developed overall. Despite that, the region has both a higher total population and population density. Europe, in particular, is well-positioned to benefit from expanding global trade for the following reasons, which are likely to drive the EU warehouse and distribution market’s ongoing expansion:
- Rising global consumption and industrial production
- Growing European trade volumes
- Increasing business inventories and stockpiling to hedge against future potential supply-chain disruptions
- Proximity to emerging markets in the Middle East, Africa, Russia, and Asia and the Suez Canal reaching Southeast Asia
- High-growth economies within its borders (in both Western and Eastern Europe)
- Last-mile infrastructure for fast delivery serving the urban logistics boom
- Growing dominance of large retailers (eg, Amazon, Walmart, and Apple)
- The more recent e-grocery boom
Through 1H 2021, CBRE reported European industrial transaction volume continued its momentum, reaching €25.2bn, a 62% year-over-year increase. Investment sales activity was just 6% below the record total in 1H 2017, suggesting a new high may be in sight this year. European industrial market continued to gain market share, rising from 14% to 23% of total commercial real estate investment over the year, according to BNP Paribas.
Early innings for European industrial amidst strong CRE fundamentals
Europe is the fastest-growing professionally managed property market (excluding China). Progressively more capital is being committed to industrial assets in the region, where it is still relatively early in the build-out of e-commerce infrastructure. Currently, European logistics lags the US in total stock and penetration (sqft per capita), and online sales as a share of total core retail sales varies greatly by country.
Given the rapid expansion of the European industrial market, property fundamentals have been very strong, with record low inventory and average rents at all-time highs. Recent reports indicate low Class A vacancy and a general undersupply of modern warehouse inventory in many countries. In 1H 2021, the average European industrial vacancy rate was near 4.0%, according to CBRE. In 2020 alone, take-up reached an all-time high for the continent with a 14% year-over-year increase for the six main European countries despite lock down measures. Looking ahead, CBRE expects to see a €1.26trn increase in e-commerce sales globally in the next five years, which corresponds to 138m sqm of logistics space – of which approximately 20% is expected to be in Europe.
Clarion Partners believes future growth prospects are now especially compel- ling throughout Europe given the post-pandemic e-commerce surge and less- mature warehouse and distribution property markets. According to Green Street Advisors, the outperformance of European industrial total returns relative to those of the other major sectors over the past several years is significant and bodes well for the industrial sector’s future investment outlook, as does the ongoing rise in institutional investors’ allocations to industrial assets.
Investment principles & strategy
Experience has taught us that attractive investment opportunities can be identified at every phase of the real estate cycle. Clarion Partners invests in high-quality assets across key property types in major markets throughout the US and specifically targets logistics facilities across Europe. We carefully screen each acquisition using in depth research and rigorous due diligence, focusing on properties that compete effectively over time and are located in markets with consistent capital market liquidity.
Strategic corporate development
Clarion Partners offers investment options in both commingled funds and separate account formats for institutional investors. Clients can select from a broad range of debt and equity investment options to build their real estate portfolios, including diversified core portfolios, sector-specific accounts, core, core-plus and value-add products as well as opportunity vehicles. Going forward, we will continue to build our business by offering our clients real estate solutions that have been tailored to support their objectives and that capitalise on current market opportunities.
Certain funds in the US private equity sector measure their performance against NCREIF Property Index, the most widely used benchmark for private equity real estate institutional investments, as well as the NCREIF ODCE Fund Index. Investments in other real estate sectors measure performance against benchmarks specific to their sector and strategy.
Statements regarding forecasts and pro- jections rely on a number of economic and financial variables and are inherently speculative. Forecasts relating to market conditions, returns and other performance indicators are not guaranteed and are subject to change without notice. There can be no assurance that market conditions will perform according to any forecast. Past performance is not a guarantee of future performance. Information contained in this report, including information supporting forecasts and projections, has been obtained or derived from independent third-party sources believed to be reliable but Clarion cannot guarantee the accuracy or complete- ness of such information. This is not an offer to sell, or solicitation of an offer to buy, securities. This information is intended for use by qualified recipients only.