Warehouse operator Prologis sees “a brand new cycle is kicking off” in 2026. Rental demand was gentle within the first half of 2025 however improved within the again half as commerce headwinds cleared and firms refocused on long-term provide chain wants.
“Softness in early 2025 gave option to renewed exercise from giant customers and e-commerce operators as soon as commerce insurance policies fell right into a narrower band of potential outcomes,” a Thursday report from Prologis Analysis mentioned.
Weak developments have been seen worldwide final 12 months as international rents fell 3.7%. The typical hire decline was 2.3% within the first half of the 12 months, slowing to simply 1.4% by the second half.
“This shift marks a important transition interval for occupiers, operators, traders and builders as planning for 2026 accelerates,” the report mentioned.
Prologis (NYSE: PLD) mentioned demand from consumption-oriented and e-commerce-related corporations led the way in which final 12 months whereas the manufacturing advanced remained weak.
Rents have been down 4.5% throughout the U.S. in 2025, with coastal markets seeing heavier declines—down 7.6% following a 9.7% drop in 2024. The highest-three performing markets within the U.S. have been Nashville, Tennessee; Houston; and Indianapolis.
By the tip of the 12 months, 40% of all markets have been seeing flat or constructive rents as new provide grew to become constrained.
World facility completions are anticipated to ship 474 million sq. ft of house to the market in 2026—the bottom stage since 2018. (Additional, Prologis expects U.S. completions to fall to their lowest stage in a decade.)
Excessive development prices, regulatory boundaries and tighter credit score markets are a few of the constraints on new builds. Prologis additionally mentioned only some corporations are taking an opportunity on speculative initiatives and that the majority are pursuing build-to-suit services with an emphasis on consolidating and modernizing operations.
Alternative prices are at the moment 20% above market rents. Prologis mentioned the market resembles “early development phases from current prior cycles,” with demand from giant corporations looking for giant services main the way in which.
“Provide has eased, demand is accelerating and broadening, and the underside for rents is forming,” the report mentioned. “Because of this, Prologis Analysis expects average international hire development in 2026 with variability by location, dimension and high quality.”
The corporate’s U.S. outlook, which was offered as a part of its fourth-quarter report final week, requires enchancment in key metrics like web absorption, occupancy and rents.
It expects web absorption of 200 million sq. ft in 2026 in comparison with 155 million sq. ft final 12 months. New warehouses coming on-line will ship 180 million sq. ft of house, down from 200 million sq. ft final 12 months. The adjustments are anticipated to cut back vacancies from 7.4% to roughly 7.1% to 7.2%, inserting upward strain on rents all year long.