Specialist logistics investor Clarion Partners is taking advantage of the subdued market to grow market share, according to head of Germany Thorben Schaefer.
“Over the last two years a lot of investors who didn’t fully understand logistics entered the market,” said Schaefer, speaking to Real Asset Media at EXPO Real.
“They overpaid and therefore the price correction has been brutal, we’ve seen a 30%-plus price drop in 12 months.” But now he sees opportunities to buy. “A lot of the newcomers have become more cautious now, while traditional core money is reluctant to buy.”
A deal earlier this summer highlighted Clarion’s ability to buck these trends when it bought a portfolio of five modern, institutional-quality logistics properties across Germany, totalling 251,793 sq m. The portfolio was acquired from funds managed by Blackstone. This acquisition took Clarion Partner Europe’s total deployment since March this year to €428 million.
So what characteristics are allowing Clarion to transact when others can’t or won’t? “We’re risk/return focussed and we only do deals that make sense,” Schaefer explained. “We’re seeing fewer processes and more off-market market testing which means opportunities are coming our way.” And secondly Clarion insists on a disciplined approach to investing. “We don’t gamble on interest rates so each deal has to stack up in today’s terms.”
And longer term Schaefer still believes that the logistics investment market is underpinned by favourable occupier trends. “Vacancy rates have increased, but only off a very low level and that has helped to buffer supply. At the same time increased build costs have risen leading developers to cut off supply,” he concluded.
By Graham Parker