Prologis, the world's largest industrial developer and landlord, is raising its earnings outlook as tenants resumed making deals, having hit pause during tariff-related disruptions earlier this year.
The San Francisco-based real estate investment trust posted an 8.8% increase in revenue to $2.18 billion in the second quarter from the prior-year period, driven by rent increases across its global portfolio.
Prologis' properties ended the second quarter at 95.1% occupancy, nearly three percentage points higher than the industry average, as leasing picked up after a number of logistics businesses put real estate decisions on hold this past spring because of uncertainty surrounding the Trump administration's shifting policy on trade. Any shift in imports can particularly affect the need for warehouse space.
The solid quarter prompted the firm to raise its expectations for occupancy, rent increases and construction starts for the full year.
"The strong demand by some of our biggest customers underscores our observation that many of them are moving beyond the noise and making significant capital investments into their businesses," Prologis Chief Financial Officer Tim Arndt said on the real estate investment trust's earnings call Wednesday.
The raised outlook from Prologis is a promising sign for the U.S. logistics sector, where tenants vacated more space than they moved into for the first time in 15 years in the past quarter, according to CoStar analytics.
The industry giant counts Amazon, Home Depot and FedEx among its largest customers and controls about 1.3 billion square feet of warehouses and other industrial property globally.
Subdued deal activity
While the pace of new lease signings remained down overall, deal velocity picked up over the quarter, peaking in June amid "very healthy" renewal activity, Arndt said.
"New leasing is occurring and customer interest is promising," Arndt said. "We continue to see customers recalibrating, not retreating, and remaining active in signing leases, even if at a slower pace."
Leasing slowed in April after President Donald Trump announced sweeping "Liberation Day" tariffs on April 2 that led to swings in financial markets and ensuing policy shifts.
The slowdown prevented Prologis from issuing a more optimistic growth forecast three months ago, despite better-than-expected revenue increases fueled by a near-record 58 million square feet of signed leases and growth in the company's data center and solar energy businesses.
Wednesday's increase in guidance "reflects our confidence in the strength and resilience of our business,” Arndt said. “Our teams are executing at a high level, and we’re well-positioned for the remainder of the year.”
The optimistic note comes as the nation's industrial vacancy rate recently hit 7.5%, a decade-long high. Industrial construction completions continue to outpace demand in the first half of 2025, according to a CoStar market report.
Rising development
Still, Prologis says it is also seeing stronger momentum in its development business, where build-to-suit activity continues to grow across all the company's global markets.
The company started build-to-suit logistics and data center projects totaling $1.1 billion in the first six months of 2025, "the largest start to a year that we have ever had," Arndt said.
The activity prompted the company to raise its outlook for development starts to between $2.25 billion and $2.75 billion for the full year — a 43% increase from the first quarter at the midpoint of the range — due in part to the higher-than-expected build-to-suit activity.
The increase returns the company’s development activity to levels expected in January, before the tariff announcements.
Prologis also raised the low end of its full-year earnings guidance by 10 cents to a new range of $5.80 to $5.85 per share.
Other industrial REITs, such as EastGroup Properties and First Industrial Realty Trust, are scheduled to post earnings in the coming days.