The world's largest industrial developer and landlord said a burst of leasing since the U.S. November election has bolstered the company's expectations for accelerating warehouse demand this year.
Prologis signed a company record of more than 60 million square feet of leases in the fourth quarter, with most of the deals signed in the weeks after the Nov. 5 election reduced economic uncertainty; Donald Trump was inaugurated as the 47th president this week.
The strong leasing pipeline has continued "at healthy levels" into the new year, Prologis Chief Financial Officer Tim Arndt said on the San Francisco-based real estate investment trust's earnings call Tuesday.
Prologis President Dan Letter said that “post-election, there’s just been this boom. We’ve had 10 weeks of very solid decision-making, and it’s unlocking previously stalled deals."
The improving outlook comes as logistics operators brace for the possibility of steep tariffs promised by Trump on Mexico, Canada and other countries that could start as early as Feb. 1.
It's too early to speculate on how the new administration will implement tariffs and other trade policies, or how the policies will affect Prologis' logistics customers, Prologis executives told investors and analysts.
Prologis said that since most logistics real estate is located close to consumers, e-commerce growth, supply chain modernization and consumption patterns affect warehouse demand more than trade policies.
"At the end of the day, given the limitations on labor, tariffs are going to be extremely inflationary," Prologis CEO Hamid Moghadam told investors on the call. "We're going to have more of them, for sure, but I think they’re going to be more moderated, once the [administration's] other political objectives are achieved."
For now, consumer spending is strong and Prologis is seeing resiliency in such sectors as e-commerce, general goods, electronics and food and beverage, Letter said.
Delayed decisions
Customers told Prologis executives they were waiting to see the outcome of the election before committing to signing leases, Letter said.
Since 2023, a number of companies have stepped back from signing new leases in response to higher borrowing costs and geopolitical concerns, including uncertainty about the U.S. elections, Letter said.
That changed in the weeks after the Nov. 5 election, he added.
Arndt said an expected drop in warehouse construction this year will “further establish the foundation to build occupancy, grow rents and increase values. Looking ahead, we believe market vacancy is topping out and rents will" increase later this year.
Prologis reported $2.2 billion in revenue for the fourth quarter, up from $1.89 billion for the same period in 2023.
The REIT's $8.2 billion in revenue for the full year exceeded 2023's $8.03 billion as Prologis stepped up development of data centers — one of commercial real estate's hottest property sectors — as demand rises for next-generation artificial intelligence applications and cloud-based data storage.
In fact, financing for new data center development across the globe is expected to achieve another record year with about $170 billion in asset value to fund more powerful and efficient data center space, according to JLL's 2025 Global Data Center Outlook report.
Prologis' more than $900 million in property sales in the fourth quarter included the $440 million sale last month of 800-890 E. Devon Ave. in Elk Grove Village, Illinois. DigiCo Infrastructure REIT, a subsidiary of alternative asset manager HMC Capital, bought the 189,240-square-foot warehouse that Prologis converted into a data center.