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Prologis Revises 2024 Outlook Amid Slower Industrial Market

The world’s largest industrial property landlord cut its annual outlook after reporting stronger Q1 revenue and earnings.

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Good morning. The world’s largest industrial property landlord cut its annual outlook after reporting stronger Q1 revenue and earnings. Plus, national commercial real estate foreclosures jumped 117% in March as trouble looms in Texas.

Today’s issue is brought to you by CRG Residential. Renovate your next multifamily project with maximum ROI and in less time.

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Prologis Cuts Guidance In Anticipation Of Weaker Industrial Market

Prologis Revises 2024 Outlook Amid Slower Industrial Market

During its recent earnings call, Prologis (PLD), the world's largest industrial landlord, revised its 2024 financial forecasts downward in response to an anticipated slowdown in industrial leasing.

Good news, bad news: Prologis reported stronger revenue and earnings for Q1. However, it also revised its annual outlook for 2024, anticipating a leasing slowdown in warehousing markets amid shifts in consumer spending and tighter inventory controls by retailers and manufacturers. Challenges include high rates, ongoing uncertainty, and sudden geopolitical turmoil.

Earnings report: Prologis posted earnings of $584.3M, or 63 cents per share, for Q1—a YoY increase from $463.2M, or 50 cents per share. Despite meeting analyst estimates with core funds from operations at $1.28 per share, the company's revenue saw a notable climb to $1.96B from $1.77B, significantly surpassing expectations.

What they are saying: "While operating conditions are healthy in the majority of our markets, customers remain focused on controlling costs, which is weighing on decision-making and the pace of leasing," Prologis CEO Hamid Moghadam said in a statement.

Headwinds incoming: PLD shares fell by 5.5% in early Wednesday trading following the news. Analysts reported logistics prices flattening out in recent quarters after a surge in demand and tight capacity drove leasing rates higher from 2020–2023. The average U.S. warehouse vacancy rate rose to 5.8% in Q1 from 5.2% in the previous period, according to Cushman & Wakefield.


Looking ahead: Prologis has revised its 2024 outlook, lowering its core funds from operations per share to $5.37-$5.47 from prior forecasts. The company also expects warehouse occupancy to drop slightly to 95.75%-96.75%. Adjusting to market trends, Prologis will decrease its development investments to $2.5-$3 billion, down from an earlier range of $3-$3.5 billion, reflecting a cooling demand for industrial spaces post-pandemic peak.


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✍️ Editor’s Picks

  • Homebuilder blues: In March, single-family homebuilding starts dropped by 12.4%, total housing starts declined by 14.7%, and multifamily construction plummeted by 20.8%.

  • Failed alliance: Marty Burger's partnership with Andrew Farkas for Infinity Global Real Estate Partners, focusing on office-to-residential conversions, was recently abandoned.

  • Regional reality: U.S. regional banks may face more CRE losses due to growing loan provisions for multifamily properties amid mounting market pressures.

  • Sky-high dreams: Oklahoma is planning for a new 1,907-foot skyscraper in Oklahoma City, surpassing the height of NYC’s One World Trade Center.

  • Fast and furious: 3.5K jobs are available in Savannah, GA thanks to Hyundai Motor Group Metaplant America (HGMA) and 15 of its suppliers.


  • Diversified success: Decron Properties acquires a 266-unit luxury community in Glendale, AZ, for $69M as part of its strategic diversification plan.

  • Private credit: Build a robust investment portfolio by adding alternative assets to your RE holdings. Percent opens the door to a world of private credit opportunities with over $1bn invested and average returns of 14.6% in 2023. (sponsored)

  • Rent report: Overall apartment rents fell slightly even as the single-family rental market outperformed, based on an analysis of 755 cities in Rentometer’s latest quarterly report.

  • Risk and reward: Last year, Republic Urban Properties opened a 320-unit complex at Gateway at Millbrae Station, securing $125M in CMBS loans despite negative cash flow.

  • Urban revival: After pandemic-related setbacks, urban apartment markets are rebounding, approaching suburban levels in occupancy and rent growth.

  • Costly conundrum: Multifamily operating costs were up 7.1% YoY in January to $9K per unit, while insurance premiums surged 27.7% (up 129% since 2018) to $636 per unit.

  • For the workers: Taurus Development is planning a 159-unit Valencia Club Apartments in Goulds for workforce housing, with a potential Live Local Act utilization.

🏭 Industrial

  • Tenant troubles: NYC's industrial vacancy rate holds steady at just 4.8%, with 1.1MSF leased in 1Q24. 

  • Successful sale: Elion Partners sold its 200KSF Boynton  Logistics Center in Florida, which they bought for $25.85M in 2020, for $36.5M to Venture One Real Estate.

  • DC deals: Terreno Realty's $84.3M acquisition of the Fleet Industrial Park in Alexandria, VA, expanded its DC portfolio to 27 buildings.


  • Sinking crustacean: Red Lobster is considering bankruptcy due to lease and labor cost issues and is seeking advice from King & Spalding.

  • Convenient conquest: 7-Eleven (SVNDY) acquired 204 stores from Sunoco (SUN) for $1B, expanding its U.S. footprint by 12%, and now operating all Stripes and Laredo Taco locations.

  • Merger madness: Privately owned TGI Fridays and U.K.-based Hostmore are set to merge, with the combined company listing on the London Stock Exchange.


  • Staying steady: Monday Properties secured refinancing for a trophy office tower at 1812 N. Moore Street and Shirlington Gateway with a 5-year fixed rate mortgage.

  • Out of office: The Greater LA office market saw some slight improvement, but vacancy rates remain at nearly 24%, with 2.4MSF added.

  • Retail realities: Brookfield Properties' One Union Square building in San Francisco faces a 40% value drop to $63.4M, potentially excluding Bulgari's exit.


  • Beautifying Boston: Cetares Management and Belcourt Capital Partners bought Hilton Boston Back Bay for $171M and plan a $25M—$30M renovation.

  • Revamped elegance: Hotel Cleveland in Ohio opened in early June after a $90M renovation. It now offers 491 rooms and a 59KSF event space.

market corrections

Texas Commercial Foreclosures Spike 129% YoY

Source: ATTOM

Texas has experienced a significant rise in commercial foreclosures over the past month, far outpacing the national average.

A closer look: In March, Texas saw a 31% increase in commercial foreclosures from February and a staggering 129% surge compared to the same month last year. According to Attom Data Solutions, this places Texas fourth in the U.S., following only California, New York, and Florida. While the national average also rose by 117% year-over-year, Texas's numbers are particularly alarming.

Ticking up: The rise in foreclosures marks a sharp departure from the lows observed during May 2020, when there were only 141 nationwide due to pandemic-related moratoriums and financial aid. By March 2024, the national count reached 625, slightly down from January's 635 but still high. Texas's foreclosures have remained relatively consistent in the early months of 2024, with counts close to January’s 56.


Big picture: Texas is facing a widespread foreclosure crisis across various real estate sectors, amplified by the highest office vacancy rates in large U.S. cities. Shifts toward remote work and downsizing are severely affecting older buildings with limited amenities. Houston is particularly impacted by multifamily property foreclosures, driven by novice investors who entered the market during a period of low interest rates. Although the national peak was 889 foreclosures in October 2014, Texas's current numbers are more alarming, with a recent peak of 61 in November 2023.


According to the latest U.S. Bureau of Labor Statistics Producer Price Index (PPI) report, the index for building materials used in residential construction, excluding food and energy, rose for the fifth consecutive month.

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