What's Happening?
Prologis has released its Industrial Business Indicator report, highlighting an inflection point in logistics real estate demand during the third quarter of 2025. The report notes increased leasing activity
driven by net absorption, new lease signings, and a healthier proposal pipeline. Despite trade volatility, large and e-commerce companies are leading growth, with improved utilization rates and favorable market conditions. The report suggests that companies are managing inventories carefully due to economic uncertainty and high holding costs.
Why It's Important?
The inflection point in logistics real estate demand is significant for understanding the broader economic landscape and supply chain dynamics. As companies navigate trade uncertainties, the demand for logistics space reflects strategic investments in supply chain infrastructure. This trend is crucial for sectors like e-commerce, healthcare, and food/beverage, which are essential for economic stability and growth.
What's Next?
Prologis anticipates a cyclical trend in inventory management, with potential rebuilding of inventory buffers as economic conditions improve. The tightening construction pipeline and stable vacancy rates suggest a favorable environment for logistics real estate, with potential rent growth as demand increases.
Beyond the Headlines
The report underscores the importance of strategic supply chain investments in response to persistent disruptions. Companies are likely to continue leveraging 'just enough' inventory strategies, balancing cost management with operational efficiency.
