What's Happening Next in Industrial? Explore 1Q 2022 earnings soundbites from Prologis (PLD).

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Prologis 1Q22 Takeaways

  • "We ended 1Q22 at 97.4% occupancy, holding average occupancy flat vs. 4Q21, counter to the typical seasonal decline."
  • "As for supply, we reduced our deliveries forecast for 2022 to 375 MSF as developers struggle to deliver on time due to lack of materials and labor, a condition we expect throughout the year."
  • "During 1Q22, US market rents grew 8.5% yoy and 6.5% yoy globally. Given this pace in our outlook on demand, we're revising our annual rent growth forecast to 22% in the US and 20% globally, in line with 2021."
  • "We're closely watching the events in Ukraine and the impact it's having on our colleagues and operations. So far, we haven't seen any impact on our business."
  • "As far as inflation, we operate over 1.0 BSF of real estate where we find replacement costs rising at multiples of inflation. While rents have been increasing from secular tailwinds for some time, inflation will create a pricing umbrella for even further rent growth."
  • "We are increasing our disposition guidance by $400M, reflective of both values and the strong selling environment."
  • "Trucking volumes will decline as fewer containers leave China due to Shanghai being shut down. It's not demand related from consumers. It's lack of supply by the producers. And I think that's a problem that people will start talking about in 2Q22 in a big, big way."
  • "Demand in Europe has been surprisingly strong. I shouldn't say surprisingly, it's been really strong."
  • "Land cost is even increasing more than construction. So clearly, rental growth has outpaced construction and land cost growth. But I think that outperformance will narrow near term."
  • "The markets that have had the biggest mark-to-market will have the strongest cap rates because you're buying a below-market income stream. Look around for the markets that have experienced the biggest rent growth the last 3-4 years, and those are the cap rates that will remain the strongest."
  • "We see our customers with their front foot forward and taking up more space. And that gives us comfort that we're not facing a recessionary environment, at least not as it pertains to our business."

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‍Read the full report by Prologis on their website.

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