US Warehouse Rents to Rise Despite Rate Drop: CEO

July 21, 2023

Prologis CEO Hamid Moghadam predicts warehouse rents will continue to rise, even as other supply-chain costs fall from pandemic highs. Lease prices have proven more resilient than transport rates, which have sharply dropped due to a shift from goods to services, inflation, and higher borrowing costs. However, rent hikes are moderating as market conditions normalize. Prologis anticipates a 5% to 10% rental growth across its portfolio this year, down from last year's nearly 30%.

Warehouse vacancy rates have risen slightly to 2.5% from 2% in the previous quarter, due to cargo rerouting to East Coast and Gulf ports to avoid potential West Coast labor disputes.

Source: Reuters

 To make it a perfect storm, the rent for warehouse has been steadily going up since the beginning of QE. A double triple whammy for businesses in goods trade, higher rent, higher payroll, higher insurance costs amid reduced demand, lowered margins and more cautionary customers— Harvey Zhao (@SevenEl77834660) July 12, 2023 

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