Some big names in CRE are concerned about how tariffs and trade wars are affecting investment and at least the immediate future. “I think [conditions] can change very quickly with policy changes,” said Blackstone President and Chief Operational Officer Jonathan Gray in a recent earnings call. “There's just a lot of underlying momentum. If this tariff diplomacy is resolved more quickly, I think you could see markets recover.”
Industrial giant Prologis is far more positive and thinks that the tariffs and trade wars that worry many others will be good in significant ways for warehouse demand.
“I think if I were going to predict anything, I would say Mexico would be a big beneficiary of all this, so with Brazil, and we would probably have less coming from China for sure,” said Hamid Moghadam, Prologis chairman and chief executive officer, during an April 16 Q1 earnings call.
Recommended For You
“There is a range of customers that are talking to us that have growth requirements,” said Christopher Caton, senior vice president and global head of research. “They have a need for space, and they just need a clear economic backdrop — tariff backdrop — to make decisions.” He added that a “handful” of their customers were rapidly bringing in goods to manage supply chain volatility.
A major part of why the uncertainty works for Prologis is the company’s position in logistics. “The logistics chain has two parts. It has the production part and it has the consumption part,” Moghadam told The Wall Street Journal after the earnings call. “We don’t play in the production part for a very simple reason: We’re not good at predicting tariffs; we’re not good at predicting labor costs; we’re not good at predicting government policy; but we are very good at predicting consumption.”
“Even with the pause in some tariffs or resolution of others, customers simply lack a steady backdrop upon which to plan their businesses,” Tim Arndt, chief financial officer of Prologis, said during the earnings call. “We've now dialogued with more than 300 customers, including two impromptu customer advisory boards representing over 20% of our rent roll. And this is what we've heard.”
“Our customers are moving quickly to manage tariff volatility with many accelerating shipments where possible,” Arndt added. “They're also rerouting volumes and have urgent demand for overflow space. Accordingly, they are looking for short-term flexibility and 3PLs [third-party logistics firms] are typically where they turn. Indeed, 3PL's flex space is getting more utilized with one prominent name describing that they've increased their utilization from 83% to over 90%.
“Additionally, alternatives such as free trade zones and bonded warehouses are being evaluated. Our customers, who are focused on food and beverage, industrial manufacturing and essential consumer products, like health and household goods, are more insulated and are operating with confidence,” Arndt also explained. “But of course, customers selling goods with China-based production face the most uncertainty.”
© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
