Prologis Sees Industrial Real Estate Entering A New Growth Cycle

Prologis executives say the industrial real estate sector is entering a new stage—one defined less by rapid expansion and more by steady, structural demand.

During the company’s third-quarter earnings call, leaders outlined how global logistics trends are reshaping the warehouse market and setting the stage for a long-term growth cycle.

Hamid Moghadam, in his final appearance as CEO, predicted warehouse rents will stabilize at “significantly higher levels” as global trade patterns and supply chain strategies evolve.

“Ultimately, it’s the rate of return and replacement costs that set long-term rents,” Moghadam said. “The market is likely to stabilize along a much higher trend line over time.”

That outlook aligns with reports from Deloitte and JLL, which show that while leasing activity has cooled from its peak, demand remains strong thanks to nearshoring and the push for more advanced logistics facilities.

Moghadam also highlighted a shift in tenant behavior: “Customers have become more desensitized to short-term noise,” he said, pointing to large, well-capitalized corporations that are underpinning market confidence.

This reflects a broader trend identified by Newmark and NAIOP: many occupiers are optimizing their existing footprints rather than expanding, with a preference for modern, energy-efficient properties.

Evolving supply chain strategies are now driving demand. Reshoring, nearshoring, and shifts in trade and energy policies are restructuring logistics networks across key U.S. markets. Analysts at CBRE and Cushman & Wakefield say this dynamic favors hubs near ports and population centers, where demand for automation-ready and sustainable facilities remains strong.

E-commerce continues to play a major role, accounting for roughly 20% of Prologis’s new leases. But executives noted that future growth will be more diversified, led by sectors like food, beverage, and healthcare. Companies are increasingly prioritizing flexibility, power capacity, sustainability, and access to skilled labor in their site selection, according to research from Cresa and JPMorgan.

Looking ahead, Prologis sees sustained global growth beginning in 2026, fueled by investment in supply chain modernization.

 “The company’s balance sheet is very capable of taking on a large volume of projects, reflecting broader expectations for rising absorption rates over the next 12 to 18 months,” said CFO Timothy Arndt.

Source: GlobeSt.