Clarion Partners Purchases $118M, 2.8 MSF Industrial Portfolio from ProLogis

Clarion Partners acquired 13 Class A industrial properties from ProLogis for $118 million, focused mostly on Midwest distribution centers.

August 25, 2011
By Barbra Murray, Contributing Editor

There is nothing like increasing a portfolio by 2.8 million square feet with the stroke of a pen. That is exactly what Clarion Partners L.L.C. just did with the acquisition of a group of 13 Class A industrial properties from ProLogis Inc. for $118 million.

The assets span seven states, with locations in core logistics markets featuring high populations: Atlanta; Cincinnati and Columbus, Ohio; Dallas; Indianapolis; San Antonio; Phoenix; Salt Lake City; and Tracy, Calif., a city approximately 60 miles east of San Francisco. The portfolio is 90 percent leased and Clarion anticipates that demand for their newly acquired distribution centers, and for industrial assets in general, is only going to grow stronger due to a handful of factors.

“Number one, this past recession was a little bit different from the previous recession in that companies basically cut their inventory to the bare minimum, so while the industrial sector had a really big downturn, we have already hit the bottom and there’s nowhere to go but up,” Tim Wang, a senior vice president in Clarion’s research and investment strategy group, told Commercial Property Executive. “Number two, is global trade. We really believe that global trade is on the rebound and we believe globalization is going to continue. If you look at the port container volume, year-over-year growth has been in the high single digits. All the market intelligence suggests that demand for warehouse space is on the rebound.” Indeed, the numbers tell the story. In the second quarter, the national vacancy rate dropped 30 basis points to 9.8 percent, according to a report by commercial real estate services firm Grubb & Ellis Co.

And there is more good news on the horizon,” Wang said. “We truly believe that in the second half of the year, we should see positive rent growth for the industrial sector.”

For ProLogis’ part, the portfolio trade dovetailed perfectly with the global industrial real estate company’s current strategy. “This disposition is part of our continuing program to enhance investor returns in our private capital funds,” Guy F. Jaquier, CEO of ProLogis Private Capital, noted in a prepared statement. “We are selectively selling properties where we have maximized value or where they no longer fit our strategic goals and objectives.”