Prologis cut its 2024 guidance during its Wednesday earnings call on the expectation of slowing industrial leasing, an indication of continued overall softening in the industrial market.

The world's largest industrial landlord reduced guidance for funds from operations, occupancy and earnings for the rest of the year.

"While operating conditions are healthy in the majority of our markets, customers remain focused on controlling costs, which is weighing on decision making and the pace of leasing," Prologis CEO Hamid Moghadam said in a statement.

Investors reacted by selling, driving Prologis' stock down by almost 6% on Wednesday morning.

Despite the gloomy guidance, Prologis reported revenue of $1.96B, beating analysts' expectations of $1.84B.

Moghadam said the company remains optimistic about market fundamentals but cited high interest rates and geopolitical concerns as factors in slowing industrial absorption, but only for the “next quarter or two.”

The company expects 2024 core FFO per share of $5.37 to $5.47, down from prior guidance of $5.42 to $5.56, and lowered expectation for average occupancy of its warehouses by 75 basis points to between 95.75% and 96.75%. Previously, the REIT had anticipated 96.5% to 97.5%.

The industrial giant further projects $2.5B to $3B in development projects this year, down from a previous range of $3B to $3.5B and in line with slower development industrywide for the industrial market as demand for space eases from historic highs during the early pandemic years.

The company's FFO for the first quarter of 2024 was $1.28 per share, compared with $1.22 per share for the same period in 2023. Prologis reported net earnings of $584M in Q1 2024, up from $463M a year earlier.