Prologis Logs 64 Million Square Feet in Deals as Rents Tick Up
Prologis has fueled the early part of 2026 with a surge in leasing and renewed rent growth. Still, executives struck a cautious tone as geopolitical tensions added a new layer of uncertainty to the outlook.
The logistics giant reported a "very active" March, with record lease signings totaling 64 million square feet, according to its April 16 earnings release and call. The momentum helped push the company through a solid first-quarter operational performance, even as executives flagged emerging risks tied to what they described on the call as the "conflict in the Middle East."
Chief Financial Officer Timothy Arndt said Prologis ended the quarter with 95.3% occupancy, reflecting the seasonal dip typical of the first quarter. At the same time, the company saw an "uptick in market rents" during the period—the first increase in two-and-a-half years—signaling a potential turning point after an extended stretch of flat or declining rents.
Development activity also accelerated. Prologis started $2.1 billion in new projects, including $850 million in logistics and $1.3 billion across two data center developments. CEO Daniel Letter underscored the profitability of that segment, noting that margins in data centers are 25% to 50% in "very profitable deals."
The company leaned more heavily into speculative development during the quarter, reflecting improving fundamentals.
"Within logistics, approximately 75% of the starts were speculative, reflecting improving fundamentals and our confidence in the need for new supply across many of our markets," Arndt said.
Still, performance varied by region and asset type. Arndt pointed to "some softer conditions" in the West and lower lease mark-to-market, adding,
"We have a pretty wide mix of market conditions, as you know, some exceedingly tight and some still soft, and that can happen at the submarket or even the unit level."
Larger-format logistics properties remain a bright spot. Letter said availability is tightening significantly for buildings over 500,000 square feet.
"Maybe one thing I would add on here is just focusing on the unit size or building size, anything over, call it, large format, 500,000 square feet or above, we're nearly sold out," he said.
"We're 98% leased across the globe at that size. So, you'll start seeing rent growth there, certainly."
Despite the strong operating metrics, the broader economic backdrop is less certain.
"The conflict in the Middle East has introduced yet another source of economic uncertainty, most directly through higher energy prices and renewed pressure on inflation and interest rates," Letter said.
So far, the company has not seen a direct hit to demand. Letter noted, "lease signings, proposal volume, and build-to-suit pipeline point to continued strength in underlying demand." He contrasted the current environment with the tariff-related uncertainty of April 2025, which led to a "relatively immediate" pause in leasing activity.
"At the same time, our customer insights are grounded in direct ongoing engagement with hundreds of real-time interactions each quarter," Letter said.
"Seven weeks into this [new] conflict, most are actively monitoring the situation, and they are telling us 2026 business plans are unchanged."
The risk, he added, is more subtle and has yet to materialize. Uncertainty could begin to weigh on consumer behavior and slow decision-making.
"That said, we're operating with a heightened level of awareness guided by the same discipline that has defined our business for decades," Letter said.
Source: GlobeSt/ALM