Prologis Tenants Brush Off Rising Rents
The market is so tight right now that developers are having trouble finding suitable land.
July 23, 2021 | Les Shaver | GlobeSt.com
On Prologis’ Q2 earnings call, Chairman and CEO Hamid R. Moghadam said high demand for industrial space meant the company could push pricing higher if they wanted to. The company saw a 4.1% rent growth in its US markets, which exceeded expectations.
On that same call, Chief Customer Officer Mike Curless said the competition for space among customers is as fierce as he has seen it. He added that Prologis probably wouldn’t lose much business if it did raise rents. Overall, less than 5% of customers are leaving due to higher rents. “I got to tell you the rent becomes a very minor discussion. Just the availability and accessibility of that space becomes the priority,” he said.
It was an interesting bit of color from one of the largest providers of industrial space in the world. Rents, the executives appeared to be saying, do not seem to matter to customers desperate to lease space.
Indeed, the market is so tight right now that developers are having trouble finding suitable land and planning permission for logistics facilities in many markets globally, and leasing decisions are being put on hold due to a lack of the right space, according to JLL’s inaugural survey on global logistics real estate. According to the poll, taken in April, more than two out of every five respondents, 43%, said they consider ‘limited availability of entitled land’ as the number one constraint on occupier demand. Over one out of every three cited a ‘lack of available speculative buildings’ as the primary constraint.
