Prologis warns of slowing logistics warehouse market

SF industrial REIT cites cost-conscious tenants and inventory control behind dim demand

Prologis warns of slowing industrial warehouse market
Prologis CEO Hamid Moghadam (Getty)

Prologis, the nation’s largest industrial landlord, warns of darker days ahead.

The San Francisco-based industrial real estate investment trust made more than analysts expected last quarter, but predicted a slowing warehouse market as tenants tamp down logistics costs, the Wall Street Journal reported, after a regulatory filing.

Prologis cut its earning projections this year, a sign of waning warehouse demand following rapid growth during the pandemic. The reason: broader shifts in consumer spending and tighter inventory controls by retailers and manufacturers.

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The dimming outlook came as Prologis posted first-quarter revenue of $1.96 billion, from $1.77 billion a year ago. Analysts polled by FactSet expected $1.84 billion. Earnings were $584.3 million, from $463.2 million.

“While operating conditions are healthy in the majority of our markets, customers remain focused on controlling costs, which is weighing on decision-making and the pace of leasing,” CEO Hamid Moghadam said.

Real estate industry analysts Savills and Cushman & Wakefield said in recent reports that pricing for logistics properties has flattened out in the past two quarters after a surge in demand and tight capacity sent leasing rates sharply higher from 2020 to last year, according to Bloomberg.

The average warehouse vacancy across the U.S. rose to 5.8 percent in the first quarter from 5.2 percent the previous period, according to Cushman. 

— Dana Bartholomew

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