Prologis sees warehouse market nearing upcycle

Core Insights - Prologis is experiencing a significant uptick in leasing activity, indicating a potential market inflection point with strengthening customer sentiment and long-term commitments from tenants [1][3] - The company reported consolidated revenue of $2.21 billion for Q3, a 9% year-over-year increase, surpassing the consensus estimate of $2.03 billion [3] - Prologis anticipates that occupancy rates are stabilizing, with a projected improvement in the market through 2026 as supply tightens [3][4] Financial Performance - Core funds from operations (FFO) for Prologis were reported at $1.49 per share, exceeding expectations by 5 cents [3] - The company slightly raised its full-year FFO guidance to a range of $5.78 to $5.81 per share, ahead of the consensus estimate of $5.77 [7] - Average occupancy fell by 110 basis points year-over-year to 94.8%, but is expected to have bottomed out [4] Market Trends - New leases commenced during the period totaled 65.6 million square feet, reflecting a 29% year-over-year increase [4] - Market rent declines have slowed to 1%, with a net effective rent change of 49% on Prologis' multiyear leases [5] - Lease mark to market indicates a 19% reset, equating to $900 million in future net operating income [5] Leadership Transition - Hamid Moghadam, co-founder and CEO of Prologis, will retire at the end of the year but will continue as executive chairman, with Dan Letter set to succeed him as CEO [6]