Despite a possible U.S. recession and slumping retail sales — down again in December, for the second month in a row — executives at Prologis said during the company's Q4 2022 earnings call on Wednesday that they anticipate 2023 will be another strong year for the industrial space giant.

Prologis CEO Hamid Moghadam said that, assuming a mild recession ahead or at least a period of essentially zero economic growth, the conditions for a contraction in U.S. industrial space use don't exist in the same way they did during the dot-com bubble of 2001 or the Great Financial Crisis of 2008.

So, he argued, Prologis will continue to thrive in a market characterized by an elevated level of demand. There are a few important factors that make conditions different this time around.

“Even if absorption stopped right now, we'd go down to 95% occupancy, which used to be considered a great, strong market,” Moghadam said.

In short, Prologis' occupancy rate, even considering the developments still underway, is so high now, at 98%, up from 97.7% in Q3 2022, that only the worst kind of recession would put any kind of serious dint in the rate.

During both the dot-com burst and the Great Financial Crisis, Prologis' occupancy was around 91%, down from the mid-90s, Moghadam said.

On Wednesday, Prologis reported total revenue for Q4 2022 rose to $1.75B from $1.28B last year, topping analyst expectations. Earnings were $587.2M, or 63 cents per share, compared with $1.67 per share in the same quarter a year ago.

The company also reported that core funds from operations, a metric of operational performance for REITs, came in at $1.24 per share in the fourth quarter of 2022, compared with $1.12 per share for the same period in 2021. For all of 2022, FFO was $5.16, compared with $4.15 in 2021.

Prologis' portfolio totals about about 1.2B SF in 19 countries. Put in context, that is roughly the size of the entire metro Chicago industrial market.

The company isn't relying on high occupancy rates alone to sustain its business in a slowdown. In October, the company pivoted partly away from spec development, with a stronger emphasis on the company's build-to-suit business.

“We are carefully managing the business and approaching our markets with a sense of caution, much as we did at the onset of the pandemic,” Chief Financial Officer Tim Arndt said on the third-quarter earnings call.

Also last fall, the company completed its acquisition of Duke Realty. The deal wasn't mentioned during the earnings call, except to say that for statistical purposes, all the Duke space is now fully integrated into Prologis' portfolio, except for same-store results.

Duke laid off a number of workers ahead of the merger, and some former Duke execs have landed elsewhere.