Logistics real estate posted a record-setting year in 2021, driven by intense competition for space that pushed rents to new heights. 

The Prologis IBI (Industrial Business Indicator) Activity Index rose to 67 across the 29 US markets the firm tracks in the fourth quarter; a number above 50 indicates growth, Prologis says.  Rents ticked up by 6.5% over Q3 figures at 20.4% annually, and logistics tenants snapped up 120 million square feet of space in the fourth quarter. Overall, absorption hit 410 million square feet in the quarter, a record, and is up 85% over 2020 numbers.

Prologis says that low supply will continue to drive competition for suitable space: "Of the 390 MSF of construction now in the pipeline, most will be spoken for upon delivery given current pre-leasing volumes," the firm notes in a new analysis, adding that around 70% of new supply is already pre-leased. And despite 270 million square feet of new supply, vacancies still fell 160 basis points in 2021 to an all-time low of 3.4%.