Prologis Bets Big on Build-to-Suit Warehouses Amid Shifting Market Dynamics

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Good morning. While warehouse vacancies creep up nationwide, Prologis is leaning into what’s working: build-to-suit projects. The logistics giant is ramping up custom development as major tenants lock in future space.

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🎙️This week on No Cap Podcast, RockStep Capital CEO Andy Weiner breaks down why the retail apocalypse was overblown and how his team is turning forgotten malls into durable cash flow machines.

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• Portfolio expansion : Starwood is making a $2.2B bet on net lease real estate with a major acquisition from Brookfield.

• Private access: The Trump administration is preparing an executive order to allow 401(k) plans to invest in private equity. 

• Price paralysis: The Fed’s latest Beige Book shows a national real estate market stalled by economic uncertainty, with hesitant buyers, falling construction, and widespread price sensitivity.

• Hidden pressure: CRE’s apparent stability may be disguising deeper risks, as delayed economic responses and tariff impacts threaten sudden market disruptions.

• Design dip: US architecture billings ticked up in May but stayed in contraction territory, signaling ongoing weakness in nonresidential construction.

• Credit cuts: Trump’s newly signed energy law accelerates the rollback of several key clean-energy tax credits, undoing much of the 2022 Inflation Reduction Act’s climate incentives.

• Fund shortfall: AEW Capital closed its largest real estate fund ever at $1.8B, falling short of its $2B target but surpassing its previous fund. 

• Immigration impact: Prologis CEO Hamid Moghadam warns that US immigration policy is worsening labor shortages, pushing construction costs higher.

• Disclosure debate: States and cities are requiring landlords to disclose all rental fees upfront, prompting pushback from some multifamily operators.  

• Power struggle: A $700M refinancing deal at Nitya Capital has reignited a bitter feud between co-founders Vivek Shah and Swapnil Agarwal.

• Tenant scrutiny: Federal immigration officials are pressuring landlords to share tenant records as part of a broader deportation push.

• Building momentum: Multifamily construction delays are falling, and labor is becoming more available, signaling improved project flow.

• Storage stabilizing: Self-storage is finding its footing midyear, with Midwest markets showing resilience despite national economic uncertainty and shifting supply-demand dynamics.

• Steady growth: Industrial real estate continues to outperform, with small-bay deals thriving and demand projected to rise.   

• Suburban play: Hines acquired a 404K SF distribution center in Bolingbrook, IL for $29.5M, as industrial deal flow holds steady in Chicago’s suburbs.

• Strong sales: US retail sales jumped 0.6% in June—outpacing forecasts—as consumers showed unexpected strength despite tariff concerns and rising import costs. 

• Brand backlash: Target’s in-store traffic has declined for five straight months following its rollback of DEI efforts, while its reputation and consumer trust also slipped. 

• Mall revival: Suburban malls across the Tri-State area are undergoing major redevelopments, swapping anchor stores for apartments, hotels, and open-air social spaces.

• Google effect: Google’s transformation of Chicago’s iconic Thompson Center into a state-of-the-art office hub is injecting new energy into the struggling Loop.

• Scandal to sale: After years of controversy and collapse, Atlanta Financial Center has finally changed hands. 

• Recovery signs: Chicago’s office market is showing signs of life with $759M in YTD investment volume and major leases signed.

• Demand dip: Office demand dropped sharply in April, with VTS reporting a 23% decline in new tenant activity, mirroring 2023’s banking crisis slump.

• Zoning clash: Southold’s sweeping zoning overhaul faces strong pushback from business owners, who argue that new restrictions would hinder commercial growth and render hotel development nearly impossible.

• Sky-high sands: Las Vegas Sands has begun construction on an $8B luxury resort in Singapore featuring a 55-story hotel, rooftop Skyloop, arena, and high-end retail.

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