Prologis (PLD) BofA NY Global Real Estate Conference 2026 summary

Operational performance and leasing trends

• Leasing volumes and occupancies have remained strong, with record quarterly lease signings expected to continue in Q3 2026, supported by a robust pipeline exceeding 100 million square feet in new inquiries.

• Positive market rent growth has resumed in the U.S. and continues globally, with secular drivers like e-commerce, advanced manufacturing, and data center build-out fueling incremental demand.

• The mark-to-market rent gap is 17%, with an additional 20% gap to replacement cost rents, suggesting a potential for mid-single digit annual market rent growth for several years.

• Strongest markets include the Sun Belt, Southeast U.S., Texas, and select central U.S. cities, while SoCal is inflecting positively; weaker markets are Seattle, Central Pennsylvania, and China, though China represents less than 1% of the portfolio.

• Europe remains a stabilizer with steady operations and earlier positive rent growth, and the SEGRO acquisition is expected to close in the first half of 2027, bringing complementary assets and teams.

Development, data centers, and capital strategy

• Development activity, especially for logistics and build-to-suit projects, has accelerated, with about 35% of development starts expected to remain build-to-suit.

• Data centers now account for about 10% of new leasing, with 5.8 GW of power secured or in advanced stages and a dedicated team of 75; the business is structured to recycle capital and limit long-term balance sheet exposure.

• Funding for data center expansion is primarily through capital recycling, with frameworks established for private equity participation in larger deals.

• Solar power generation and storage have reached 1.4 GW, representing 8% of the portfolio, with significant runway for further growth, especially in the U.S.

• Transaction markets remain strong for high-quality portfolios, with cap rates in the low fives and IRRs in the low to mid sevens; short-term rate moves may affect pricing, but long-term inflation is expected to drive values.

Industry outlook, capital flows, and macro factors

• E-commerce penetration in the U.S. is about 24% of retail sales, growing by roughly 1% per year, with a 3x multiplier effect on logistics demand; Europe and LATAM are also seeing growth.

• Funds business has adapted to softer capital raising by launching new vehicles and attracting JV-level LP capital, with open-ended funds expected to return to maintenance growth.

• Trade policy disruptions are seen as net positive for logistics demand due to the need for redundant supply chains, with Toronto highlighted as a strong, supply-constrained market.

• Market rent growth is expected to remain positive, with mid-single digit or better annual increases likely as rent gaps close.

• If long-term rates stay higher, the biggest impact will be less new supply; third-party capital is expected to become more important for REIT growth, and 2027 same-store NOI growth should be similar to 2026.