Prologis Earnings Report 01/21/26 Takeaways
The Supply Story
Glass Half Full: New deliveries are expected to decline from roughly 200M SF in 2025 to 180M SF in 2026. Net absorption has surpassed completions for the first time since 2022.
Glass Half Empty: Vacancy remains elevated at approximately 7.4%, with modest improvement to 7.1%–7.2% anticipated by year-end 2026. Progress on the vacancy overhang is incremental.
The Takeaway: Supply dynamics are improving structurally, but excess inventory persists.
The Demand Story
Glass Half Full: U.S. net absorption is projected to increase from 155M SF in 2025 to 200M SF in 2026. E-commerce represented "20% of new leasing, its strongest year since 2021." Southern California shows signs of recovery with positive absorption and pricing firming in select areas.
Glass Half Empty: Despite record leasing volumes, vacancy decline lags expectations. Much activity reflects tenant portfolio optimization rather than organic expansion. Lease renewal rates of 78% suggest tenants remain when they can restructure their space needs.
The Takeaway: Demand is improving gradually, driven largely by tenant rightsizing and consolidation rather than net growth.
The X Factor
Approximately 40% of Prologis' 2026 global development starts target data centers. With a 5.7 GW power pipeline, land with energy access is gaining value. Traditional industrial supply faces structural constraints from zoning limitations and energy availability—not just demand weakness.
