Melinda McLaughlin, global head of research at Prologis, Inc . (NYSE: PLD), was a guest on the latest episode of Nareit’s REIT Report podcast. She discussed broad trends impacting logistics today, including global trade, delivery speeds, new construction, e-commerce, rising barriers to supply, standout global markets, and more.
McLaughlin said 2025 looks set to be a “solid year” for both consumption and global trade, based on strong labor markets. E-commerce, meanwhile, is “absolutely gaining market share in all of our markets around the world,” she noted.
At the same time, there's been a lack of construction for the largest logistics buildings since 2022, McLaughlin pointed out. “Today, and looking at 2025 as a whole, we see deliveries down 35% year over year for all types of logistics real estate, but that number is a 65% decline for bulk buildings, so really setting the stage for demand and supply to rebalance and maybe even have some scarcity in certain markets.”
During the interview, McLaughlin also noted that:
- Desired delivery timelines in the U.S. are about two days or less. “You really need to be close to end consumers to facilitate that.”
- Brazil has had the most notable decrease in vacancy and increase in rents globally. “Brazil's a bit of a standout right now.”
- New project groundbreaking is expected to reach a cyclical low in 2025, about 15% below normal levels.
- Increased regulation is limiting the aggregate amount of new supply that can be started. “That's going to add long-term premiums to existing logistics real estate buildings and also reduces the risk of oversupply throughout the cycle.”
- In the U.S., “we see the mini cycle troughing in 2025. Vacancies are going to peak at a relatively low level as new supply falls sharply. That's going to lay the foundation for future rent growth as segments of the market begin to run out of available space and replacement costs remain about 15% higher than market rents.”