It was early 2022 in the United Kingdom, and an anomaly was occurring: Interest rates were beginning to rise, but logistics sector cap rates were continuing to fall.
Alistair Calvert, CEO, Clarion Partners Europe, took note of this anomaly, and Clarion Partners Europe proceeded to pull out of a large number of transactions that were in the last stages of closing.
“To explain to our investors why we killed a lot of deals,” Calvert said in an interview with IREI, “we had our research department graph all of the major markets in Europe where you take the interest rate movements, mostly the interest swap rate, and then overlay it with the cap rates, and then move the cap rate, timing-wise, until you get the best fit. And what was not surprising is that cap rates and interest rates generally move almost perfectly together.”
The time lag between that synchronicity is of a quite consistent duration depending on the country. In the United Kingdom, for example, t
