Prologis Plans $2.1B In Development, Led By Data Centers
Prologis shook off geopolitical uncertainty and reloaded its development pipeline one year after a pullback in new projects, but it is more keen on data centers than its bread-and-butter warehouses.
The world’s largest industrial landlord kicked off about $2.1B worth of new development in the first quarter, with data centers accounting for about 62%, or $1.3B.
Prologis expects new development starts this year to reach $4B to $5B, with data centers making up about 40% of that total estimated value, The Wall Street Journal reported in February. That is a major jump from 2025, when data centers accounted for about 10% of the company’s roughly $3B in new development.
Data center suppliers, companies that support the data center industry, are increasing their acquisitions of logistics space already, creating “a new structural driver within logistics real estate demand,” Prologis Managing Director, Global Strategy and Analytics Chris Caton said during the firm’s first-quarter earnings call Thursday.
Data center suppliers have gone from being 5% of new leases a year ago to 10% of new leasing now, Caton said. He also expects them to stick around.
“We see them signing deals with really healthy terms,” Caton said.
As for its core industrial business, the momentum the San Francisco-based company saw at the end of 2025 has carried into 2026, despite the conflict in the Middle East and its affiliated blockage of the Strait of Hormuz.
“While the geopolitical backdrop has become more uncertain in recent weeks, our business continues to perform at a very high level,” Prologis CEO Dan Letter said on his second earnings call since taking over for Hamid Moghadam at the company’s helm at the end of 2025.
Market indicators, including lease signings and the build-to-suit pipeline, are still strong, Letter said, a marked difference from the way its customers responded to tariff fears last year. Clients aren’t changing or pausing business plans so far, he said.
“March was a very active month for new leasing,” Letter said. “By comparison, when our business faced abrupt tariff-related uncertainty in April of 2025, the pause in leasing activity was relatively immediate before thawing out in the following weeks and months.”
The company signed a record 64M SF of leases in Q1 and commenced 66.7M SF. Occupancy in the first quarter was 95.3%.
“We progressed further through the stages of inflection, with demand strengthening, vacancy topping out and an increase in the number of markets providing positive rent growth,” Prologis Chief Financial Officer Tim Arndt said.
Prologis’ net earnings attributable to common stockholders reached $980M in Q1, up from $592M in Q1 2025 but down quarterly from nearly $1.4B in the last three months of 2025.
Revenue hit roughly $2.3B, up from $2.1B in the same period last year. Core funds from operations per diluted share was $1.50 in the first quarter, compared to $1.42 in the same period a year ago.
The developer increased its outlook on several fronts, including occupancy to between 95% and 95.75% and core FFO to between $6.07 and $6.23 per share.
The industrial market nationally has spent a couple of years trying to find its footing following the wild ride of pandemic-era e-commerce, but vacancies are flattening.
The U.S. industrial market posted approximately 40M SF of absorption in the first quarter, up 52% from 26.3M SF in Q1 2025 and the best start to a year since 2023, according to a first-quarter report from Cushman & Wakefield. Vacancy was 7%, flat from the previous quarter and slightly elevated from 6.9% the same period the year before.
