Prologis Bullish on Warehouse, Data Center Sectors

Prologis continues to see strong demand for logistics and data center space, driven by e-commerce and supply chain optimization. In its second quarter 2024 earnings call, Prologis highlighted a number of positive trends in the sectors, driven by ongoing e-commerce growth and supply chain optimization.

The company also provided an update on its outlook for the remainder of the year.

Strong Demand for Logistics Space

Prologis reported a significant increase in leasing activity during the second quarter, with 52 million square feet leased across its portfolio. This represents a 27% increase over the first quarter and marks one of the company’s highest leasing quarters in recent years. The strong demand for logistics space was driven by several factors, including ongoing e-commerce growth and a focus on supply chain optimization.

Despite the overall increase in leasing, Prologis noted that many of its customers are still taking a cautious approach to decision-making. The company is seeing a trend of customers optimizing their existing footprints before committing to new space. This has led to a slower decision-making process, particularly in markets with higher availability.

Prologis also highlighted the continued strength of its U.S. portfolio, which is outperforming the market by over 320 basis points. The company’s focus on high-quality, well-located assets has helped to drive demand and support rent growth.

Data Center Expansion

In addition to its logistics business, Prologis is also seeing strong demand for data center space. The company is in the process of expanding its data center portfolio and has secured a number of new development opportunities. Prologis is also focused on increasing its access to renewable energy for its data center operations.

The company is currently in the process of deploying 1.3 gigawatts of power for its data center business, with a focus on securing long-term power purchase agreements. Prologis is also exploring the use of on-site renewable energy generation and battery storage to support its data center operations.

Looking ahead, Prologis remains optimistic about the long-term outlook for the logistics and data center sectors. The company is seeing a continued shift in consumer behavior towards e-commerce, which is driving demand for last-mile distribution centers. Prologis is also well-positioned to benefit from the ongoing trend of supply chain optimization, as companies look to reduce costs and improve efficiency.

In the data center sector, Prologis is focused on expanding its presence in key markets and increasing its access to renewable energy. The company is also looking to capitalize on the growing demand for cloud and edge computing services.