Prologis 2026 Bold Predictions
Prologis has a visibility into the industry that few can parallel. In this month's newsletter we'll A) review Prologis's bold prediction for 2026 and B) see where they landed on their 2025 predictions.
Action Plan for 2026/2027 Leases
I always try to bring projections and insights back to action. What can we do about these trends if they prove to be true?
For starters if you have a 2026/2027 lease expiration date you should be in the game now. This is seen as the trough of the industrial real estate cycle with the lowest rental rates and maximum free rent of the last 5 years. With a recovery forecast in the future (given the range of opinions on when the recovery is felt being 2-4 quarters from now), that means tomorrows overall leasing economics will be less favorable in the future.
What does this mean? Work your renewals early and often. Large institutional landlords have shifted from holding on to their rental rates to meeting the market in order to focus on occupancy. At some point in the next year they will shift back to holding rates and lowering concessions. The pandemic taught us that when the market goes up, and there is a whiff of competition (more than one tenants trying to negotiate on any given space, much less more than two trying to negotiate on any given space) rental rates snap back incredibly fast.
That does not mean that landlords will want to renew leases early of course. That just means you have to educate your teams on the market, increase your understanding of the market data, use the time you have to really know the value of the property you current utilize, and know what your occupancy means to the landlords portfolio value, and know what value the property means to your overall supply chain.
In order to address these trends, we have spent 2025 interviewing and assembling our team of specialists so that we can increasingly bring operations consultants, supply chain network design modelers, transportation optimization consultants, WMS consultants, labor training and onboarding specialists, industrial engineers to the table.
Our goal is to supercharge your visibility. we help you evaluate the true value of staying in your property and reinvesting for another 5-10 years versus "right-sizing" into a new property, potentially with new technology, new labor market, new transportation lane, and/or new geographic market. We call it Beyond the Real Estate and look forward to the opportunity to talk with you about your industrial property grow plans and challenges and see how we can creatively help your team achieve success.
2025
Reflection on 2025 Bold Predictions
Did last years bold predictions play out? Lets take a look. * Bulk space did start rebalancing in 2025 but it was more like in Q3 2025 which given the tariffs speed bump seems reasonable. * Air freight and South America are not my areas of expertise so I will not opine on them. * Construction was definitely quiet with land values plummeting, increasing land use regulation taking shape in California (and to some extent nationally with several high throughput area facing continued opposition and moratoriums to new development). * We spoke with and have a podcast episode below highlighting the freight market consolidation that looks to be continuing with several logistics oriented businesses coming to the market and with the price discovery period ending in a more realistic view of enterprise value and several high profile bankruptcies. * Lastly, the ports, global trade and GDP growing faster than anticipated. This one is funny in that we achieved the roughly 2.1% US GDP growth forecast but instead of the "soft landing" that was being forecast, it turned into a whiplash where we had a recession scare followed by a boom.
Podcast
In the pursuit of further education, collaboration and enhancing our network of industry professionals that can support your business growth, we continue to bring you interviews from industry leaders/ * Inside the Maersk Machine: The New Era of Big Box 3PL with Scott Weiss * Forklift Automation Evolution with Mohammad Nafisi * What Drives Real Value in Logistics: An M&A and PE Perspective with BGSA's Nikhil Sathe * The Foundation of AI-Ready Supply Chains: Unified Data w/ Tim Judge * Maximizing Warehouse Throughput w/ Adrian Betts * Uncovering Hidden Margin in Last Mile Shipping w/ Keyan Bazargan * Mastering Project Management w/ Paul Lukehart * Supply Chain Strategy w/ Joe Dunlap
The episodes are sure to bring further real time insight into how we can all do better. Full Audio Episodes Available Here Full Video Episodes Available Here
I love the saying that "you are one relationship away from everything you are trying to build." Let us know if we can help provide an introduction to any of these people in our network that can help you build your organization's skills up.
Closing Perspective
Thank you to everyone for reading this newsletter, for being a part of our community, for having a growth oriented mindset and for having problem solving tenacity. We're looking forward to working together in the future and hope you enjoy time with your families over the holidays!
Best Regards,
Justin
Justin Smith, SIOR MBA, MRED, MCR, MSCM Candidate Senior Vice President | Principal Lee & Associates | Irvine
D 949.790.3151 C 949.400.4786 O 949.727.1200 jbsmith@lee-associates.com (mailto:jbsmith@lee-associates.com) ____________________________________
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