2020 Prologis Logistics Rent Index

Introduced in 2015, the annual Prologis Logistics Rent Index examines trends in net effect market rental growth in key logistics markets across North America, Europe, Asia and Latin America.

The company’s proprietary methodology focuses on taking rents, net of concessions, for logistics facilities.

Key takeaways from the new paper include the following:

• Titled “Resilience Tested,” the index notes that global rent growth improved through year-end 2020 despite a mid-year dip due to the pandemic.
• Structural demand drivers included an acceleration of e-commerce, reassessments of inventory levels and a greater need for speed to market.
• Globally, uncertainty around the pandemic led to negative growth in most markets in the second quarter of 2020, with the exception of Japan and Brazil, which recorded stable or positive growth throughout the year.
• Most markets recovered quickly as concessions given initially to secure occupancies were reversed; vacancies remained low and demand stayed healthy.
• Growth in 2020 was most pronounced in the back half of the year.
• Overall, the strength of logistics fundamentals was tested and proven in 2020.
• Prologis Research anticipates continued growth across Prologis markets globally.
• Expansion is expected to be the most-pronounced in infill locations where expanding e-fulfillment should result in competition by logistics users for the best locations.

January 2021 IBI Overview

Customer activity stayed in the growth range through the fourth quarter of 2020 and into early 2021, and the expectation is for continued structural tailwinds and an improved cyclical outlook this year.

Key takeaways from the current IBI include:

• Demand for logistics real estate surged to more than 100 million square feet in the fourth quarter, with expansion spanning industries, markets and size categories.
• Demand exceeded new supply for the first time since mid-2019 and the vacancy rate fell to 4.8%.
• Prologis Research expects continued structural demand tailwinds and an improved outlook for 2021; the forecast for 2021 net absorption has been upgraded to 280 million square feet.
• Of note, completions should match this pace, with vacancy holding steady through year-end.
• Rent growth should accelerate further to approximately 5% in 2021, driven by strong demand, limited availabilities and rising replacement costs.