Prologis says softness in logistics real estate market to last into mid-2025

Logistics real estate landlord Prologis said the current downturn in warehouse leasing demand will likely extend into the middle of next year as vacancies have likely not yet peaked. Management from the company noted on a third-quarter call Wednesday “a measured level of optimism” and that “customers are very engaged, but they’re just not making decisions.”
San Francisco-based Prologis (NYSE: PLD) reported core funds from operations (FFO) of $1.43 per share, 5 cents higher than the consensus estimate and 13 cents higher year over year. The company raised the bottom end of its 2024 FFO guidance range by 3 cents to $5.42 and lowered the top end by 1 cent to $5.46 per share. The consensus estimate was $5.42 at the time of the print.
Consolidated revenue increased 6% y/y to more than $2 billion in the period. Total leases commenced included more than 50 million square feet, a 10% y/y increase. Occupancy fell 120 basis points y/y to 95.9%, but the company said that metric outperformed the broader market by 300 bps.
Table: Prologis’ key performance indicators
Global market rents were down 3% overall during the quarter but only half that amount when excluding larger declines in Southern California. Even with the headwinds, Prologis’ Southern California portfolio saw rents change on multiyear lease commencements by 84% on average.