The logistics property company, Prologis is benefitting from a “boom” in demand in the US. Speaking to analysts after the release of Prologis’ annual results, the company’s management said that there had been “10 weeks of very solid decision making and unlocking previously stalled deals”.
In the fourth quarter, 2024 revenue was up 16% year-on-year as compared to revenue over the full year that increased at just over 2%. The past 12 months have seen a cooling of the logistics property market, especially in the US. E-commerce had fuelled furious demand for new fulfilment centres and cross-docks in 2020-2023, a demand that did not collapse in 2024 but which certainly grew at a slower rate. However, Prologis has seen an up-tick in the fourth quarter which might indicate a change in trajectory. What is driving this recovery in demand is not clear. US retail sales are robust and there are some signs that e-retail has recovered to a degree, possibly growing faster than conventional sales again, but it is too early to be certain.
Statements from Prologis’ management imply that it is more an increase in confidence by investors that is driving higher demand, with the CEO of Prologis, Hamid Moghadam, stating that “post-election leasing activity has been strong, and our ongoing conversations with customers support our expectation that the market is nearing an inflection point”. In particular, he commented, it was data centres and energy sector facilities that have been the dynamic segments of the market.
Prior to 2020, the warehousing market was fairly buoyant, driven by the emerging needs of both a changing retail sector but also changing trade patterns. Possibly what Prologis is seeing over the past few months is what might be called a return to normality, although the instability in supply chain dynamics is likely to continue to have an impact. However, what is probably more likely is that the US economy in general and its retail market in particular has a greater degree of confidence.
Author: Thomas Cullen
Source: Ti Insights
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