Clarion Partners has been a leading real estate investment manager for more than 40 years, using the judgment of our experienced professionals 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 $74.2bn in total assets under management for approximately 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 over 300 employees and maintains a presence in strategic markets across the United States and Europe. Our strength lies in a well-established network of experienced professionals who bring a deep knowledge of local markets to every investment decision.
As a subsidiary of Clarion Partners, Clarion Partners Europe (CPE) operates out of offices across Europe, including London, Jersey, Frankfurt, Madrid, and Paris. CPE 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 nearly two-decade track record acquiring, managing, and developing high-quality logistics real estate concentrated around Europe’s largest and strongest markets, CPE is a partner of choice for businesses of all shapes and sizes requiring industrial space to meet rapidly evolving customer and consumer demand.
Sector forecasts
LOGISTICS: Normalisation of occupational demand
The logistics occupier market is undergoing a normalisation of demand after the pandemic-induced boom. In the first half of 2024, total take-up across the nine major European markets was 11% and 15% below the same period in 2023 and the 10-year average, respectively.1 Take-up may remain subdued in the short term as tenants defer decisions and re-evaluate their logistics needs.
As demand normalises, the vacancy rate has increased by 30 basis points to 4.3%, though it remains below the long-term average of 4.9%.2 Many markets are also seeing elevated levels of tenant-controlled ‘grey space’, which often goes unreported and adversely affects demand-supply dynamics. However, the active development pipeline, particularly in the speculative segment, has slowed from recent highs due to rising construction and financing costs. Softening market fundamentals have led to a slowdown or pause in rental growth across most markets, accompanied by expanded incentive packages.
Capital markets in recovery mode
While a rebound in the occupier market may take longer to materialise, the correction in capital markets appears largely complete. Declining inflation and interest rates have bolstered investor sentiment. On 6 June 2024, the European Central Bank (ECB) broke with tradition by becoming the first global central bank to cut interest rates, with swap rates decreasing since midyear as markets began to price in lower interest rates. Signs of recovery are particularly evident in core markets where prices have adjusted more quickly, and competitive processes are attracting deeper pools of capital. This positive momentum in logistics capital markets was underscored by Green Street’s Industrial Pan-European CPPI, which rose by 2.8% in the first half of the year. Transaction volumes are gradually recovering. Capital invested in logistics during H1 totalled €16.1bn, a 7% increase compared to the same period last year. Investor confidence in European logistics remains strong, as reflected in the sector’s high market share (20% in the trailing 12 months to Q2 2024). The core Western European markets of France, Germany, the Netherlands, and the UK accounted for 61% of logistics-bound investment in the first half of the year, slightly below the long-term average of 67% .3
Positive outlook for logistics
With inflation seemingly under control and interest rates declining, the likelihood of an economic soft landing in the eurozone has increased, as recent data suggests. However, the recovery path remains uncertain due to potential ECB policy shifts and heightened geopolitical risks.
Despite normalised leasing demand and increased vacancies, the European logistics sector remains well-positioned. The slowdown in development pipelines and new supply in many markets should help cap vacancy rates. The active speculative development pipeline was 27% smaller in Q2 than a year prior.4 Additionally, the e-commerce sector is resuming its space uptake after a brief pause. Other longterm drivers of occupational demand, such as nearshoring and reshoring, remain strong and have even accelerated as occupiers seek to secure their supply chains in an increasingly uncertain geopolitical environment. On the supply side, restrictive planning regimes and growing opposition to new logistics developments, particularly near cities, limit the amount of new space that can be brought to market. While short-term challenges persist, we believe these factors support European logistics’ long-term outlook and its relative outperformance compared to other mainstream property types.
1 Source: CBRE, Clarion Partners Investment Research, Q2 2024.
2 Source: CBRE, Clarion Partners Investment Research, Q2 2024.
3 Source: CBRE, Clarion Partners Investment Research, Q2 2024.
4 Source: CBRE, Clarion Partners Investment Research, Q2 2024. Note: Data for Belgium, France, Germany, Italy, the Netherlands, Spain and the UK.
This material does not constitute investment advice, nor does it constitute an offer of any product or service from Clarion Partners LLC or Clarion Partners Europe and should not be viewed as a current or past recommendation to buy or sell any securities. Investment in real estate involves significant risk, including the risk of loss. Investors should consider their investment objectives and risk tolerance before investing.
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 fund 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 opportunistic 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.
Performance verification
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.
COMPLIANCE STATEMENT
Statements regarding forecasts and projections 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 completeness 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.
