E-commerce giants like Amazon leasing millions of square feet of distribution and fulfillment centers have driven demand for U.S. industrial real estate to record levels, but the head of a major industrial REIT thinks the market is about to shift.

"After seven years of demand outpacing supply, we still expect to reach equilibrium in 2017, but given the number of new starts underway this year, we now expect supply to slightly outpace demand in 2018," Prologis CEO Hamid Moghadam said on the REIT's Q1 earnings call last week.

Moghadam said private developers backed by institutional capital have fueled a boom in industrial construction, especially in areas with strong demand and low vacancy. More than 422M SF of new warehouse space was built between 2010 and 2016, with 322.5M SF of that concentrated in the top 10 industrial markets. Moghadam identified five markets as having elevated levels of speculative industrial development: Dallas, Houston, Atlanta, Indianapolis, Louisville and Southern California's Inland Empire.

Given the coming oversupply in many U.S. markets, Prologis is beginning to shift its focus to Europe. The REIT in February formed a new UK logistics development venture with a total expected value of $1.26B. Moghadam said supply and demand dynamics look better in Europe, where spec development has been less common.

"We expect Europe to boost our growth starting in 2018," Moghadam said. "Development in Europe remained disciplined in the first quarter and in our case, 100% of our starts in the region were build-a-suits."