- Prologis more than doubled its Q4 net earnings, driven by a surge in leasing activity following the November election.
- The company set a new record with over 60 MSF of leases signed in Q4, as market conditions improved post-election.
- Prologis forecasts a dip in occupancy for 2025 but expects a steady recovery in net absorption and rent growth, driven by less new supply.
- A shift to data centers and renewable energy development is expected to be a serious growth area for the company in 2025.
Prologis (PLD), the world’s biggest industrial landlord, reported impressive earnings for 4Q24, more than doubling its net income from the previous year, per Bisnow.
By The Numbers
The company’s net earnings skyrocketed from $629M (68 cents per share) in 4Q23 to nearly $1.3B ($1.37 per share) in 4Q24.
This surge was mostly thanks to an uptick in industrial leasing activity following the November presidential election, which gave the market a jolt of confidence. Prologis beat Wall Street’s expectations, generating over $2.2B in total revenue for the quarter, well above the $1.94B consensus estimate.
Tim Arndt, Prologis CFO, stated the company set a new record by signing more than 60 MSF of leases in Q4 after a slow start to the quarter. Prologis President Dan Letter noted that the market was “very quiet” before the election, with many customers holding off on decisions.
Strong Rent Growth Ahead
While Prologis is confident in its continued success this year, the company anticipates a slight dip in occupancy, which fell from 95.9% in Q3 to 95.6% in Q4. Prologis forecasts average occupancy will hover between 94.5% and 95.5% for 1H25.
Despite the slight dip in occupancy, Prologis is also forecasting a 20% improvement in net absorption compared to 2024. Fewer new completions are expected, with supply around 35% lower than in 2024, which should drive lower vacancy rates.
This, in turn, should create favorable conditions for rent growth. Prologis predicts a shift to higher rents, as replacement costs are currently 50% higher than existing lease rates.
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Data Centers and Renewable Energy
Beyond traditional industrial real estate, Prologis also focuses heavily on expanding its data center and renewable energy portfolios. The company’s growth in these sectors is part of its long-term strategy to diversify its holdings and capture emerging market trends.
Prologis expects to begin up to 400 megawatts of new data center projects this year, and the company is setting ambitious goals for renewable energy generation. Arndt announced that Prologis is on track to meet its 1-gigawatt solar generation and storage goal by the end of 2025.
In a notable deal last quarter, Prologis sold a data center development in Elk Grove Village, IL, showcasing its expanding capabilities in the high-demand sector. The company plans to build 10 gigawatts of renewable energy infrastructure over the next decade, leveraging its vast portfolio of 6K buildings and 15K acres of land.
Growth Through Acquisitions
Prologis’ growth strategy in 2025 will also include significant acquisition spending. The company earmarked between $750M and $1.25B for acquisitions and expects to invest between $2.25B and $2.75B in development starts.
As CEO Hamid Moghadam stated, the company’s flexibility in managing megawatt-based projects will allow it to scale up significantly in these high-potential sectors.
Positive Market Response
Investors responded positively to the company’s strong Q4 results, with PLD shares up more than 7% by mid-afternoon on the day of the earnings call.
The combination of strong leasing activity, a shift to higher rents, and the expansion into data centers and renewable energy has positioned Prologis for continued growth in 2025.
