Executives at the world's biggest industrial developer and landlord are optimistic that almost all its warehouse property will remain leased over the coming year, despite economic uncertainty.

Prologis, the San Francisco-based real estate investment trust, reported revenue rose 37% to $1.75 billion in the fourth quarter from the same time a year earlier, and reached nearly $6 billion for the full year from $4.8 billion for 2021.

Average warehouse rents gained nearly 5% during the quarter for a full-year total of 28%. Over 99% of Prologis' portfolio is either leased or the subject of negotiations, Chief Financial Officer Tim Arndt said on the company's earnings call Wednesday.

"With regard to our markets and leasing activity, the bottom line is that conditions remain healthy, and there is little we see across our results or proprietary metrics that point to a meaningful slowdown," Arndt said.

Prologis said in October it was easing back on its construction of warehouses to better position itself for a potential economic downturn.

For Prologis, "the development pipeline across our market stands at 565 million square feet and our expectation for the year is that the pipeline will decline," Arndt said.

For the industry, total U.S. industrial development starts plunged 40% in the fourth quarter as inflation and the higher interest rates accompanying it began to curtail the largest commercial real estate construction boom by square footage recorded for any property type in the U.S. since the 1980s, CoStar data shows.

For Prologis, the new buildings will push vacancies from 3.3% today toward 4% later in the year, he said, though the construction pullback will start to reduce vacancies by the end of 2023 or in 2024.

For the broader industry, the completion of industrial projects begun during the pandemic's surge in warehouse demand is expected to combine with a slowing economy to drive up the vacancy rate across the country this year. Brokerage CBRE projects a 10% to 15% decline in leasing as some businesses delay or cancel expansion plans or trim their storage needs by clearing excess inventory in a softening economy.

Amazon and other companies have cut back warehouse expansion and started to sublease space in many of the nation's largest warehouse hubs. Developers have scaled back projects as borrowing cost have increases and demand wanes.

Arndt said the revenue increase in the fourth quarter came as the average occupancy of its properties edged higher.

The REIT's steady results reinforce that most of the challenges in the U.S. industrial market this year stem from rising construction and financing costs rather than any declines in property income or performance, said Adrian Ponsen, CoStar’s director of U.S. industrial analytics.

The company's occupancy rate rose to an all-time high this month and it started fewer new projects than any fourth quarter in more than 10 years, Ponsen said.

"It is not hard to see how this sends the industrial market toward yet another space shortage in 2024 and 2025, when fewer new projects will be completing, as a result of the pullback in development starts," Ponsen added.