Prologis had a strong 2024, with things improving significantly after the presidential election.
“In our business, the bottoming process across our markets continues to progress,” said chief financial officer Timothy Arndt in a 2024 Q4 earnings call on Tuesday. “Leasing in our portfolio accelerated following the U.S. election, and the pipeline has started the year at healthy levels.” Prologis signed over 60 million square feet of leases during the quarter, a company record. Interest diversified across customer profiles, size requirements, and markets.
“Looking ahead, we believe market vacancy is topping out and rents will inflect later this year,” Arndt added.
The REIT closed 2024 with more than $1.9 billion worth of acquisitions, $1.34 billion in development starts, a 95.8% average occupancy, and $7.4 billion in available liquidity. The fourth quarter ended with 6.7% cash same-store net operating income. Net earnings for 2024 were up 21.9% year-over-year.
One example from the quarter that highlights an important direction for the company is its Elk Grove data center in Chicago. “Elk Grove is a great showcase of our data center development capabilities, which are more comprehensive than most,” Arndt said.
“Elk Grove was a logistics asset that we converted to a powered shell before securing a build-to-suit turnkey transaction with a hyperscaler last fall. We simultaneously identified a buyer and closed in the fourth quarter at very attractive economics. Because USLF owned the property for our structuring, procurement, leasing, and monetization efforts, Prologis earned a value creation fee of $112 million, which was not included in our prior guidance due to the uncertainty and the timing of the transaction.”
An upcoming challenge for logistics companies has been President Donald Trump’s continued threat to impose 25% tariffs on the two largest trading partners of the U.S., Mexico and Canada. A number of logistics companies have made clear that nearshoring remains on their radar.
Freight broker C.H. Robinson Worldwide has more than 1.5 million square feet of cross-dock and warehousing space along the border, as the company’s president of North American surface transportation Michael Castagnetto explained at a recent investors’ day.
Asked about the implications, Prologis co-founder, chairman, and CEO Hamid Moghadam called it “primarily an immigration discussion.”
“Because at the end of the day, the combination of deporting people and wanting to put tariffs on, I don't know where the labor is going to come from,” Moghadam said. “It's either going to come from China Plus One or it's going to come from Mexico. And my bet is that it's going to come from Mexico but under new immigration controls and policies.”