Prologis, the world’s biggest industrial developer, raised its profit outlook after posting record warehouse leasing that was driven in part by the U.S. data center boom.
The San Francisco-based firm signed 64 million square feet of warehouse leases — its highest for a first quarter — as revenue rose 7.5% to $2.3 billion from the year-earlier period.
Firms supplying construction materials and equipment for data centers are a growing customer base for warehouses, according to Prologis executives. That business is “a new structural driver of logistics real estate demand,” Chris Caton, the firm’s managing director of global strategy and analytics, told analysts during the company’s earnings call.
Construction spending on data centers has surged while warehouse investment has cooled, with data centers poised to surpass warehouses in 2026, according to CoStar research. To tap demand, Prologis has gotten into the business of both building data centers and supporting other builders of those properties through its warehouses.
CoStar data shows 125 data centers opened in 2025, totaling 33.5 million square feet. That number is expected to balloon to 219 projects totaling 76.1 million square feet in 2026 and another 183 projects in 2027 totaling 73.4 million square feet.
Prologis raised its earnings outlook this year to a range of $3.80 to $4.05 a share, up from its forecast in January of $3.70 to $4 a share. The figures are based on expected occupancy of nearly 96% for the year as leasing picks up across the company’s 1.3 billion-square-foot portfolio.
Building data centers
For its part, Prologis started two data center projects during the quarter; both are preleased to large tech firms. Overall, the firm has letters of intent with users for projects with a total of 1.3 gigawatts — capable of powering up to 750,000 homes — and plans to build up to 100 data centers over the next decade.
The latest data center starts “mark a significant acceleration in this strategic initiative,” Morgan Stanley analyst Ronald Kamdem said in a research note.
Meanwhile, fellow real estate giant Blackstone is opening a new gateway for public investors into data centers, betting that artificial intelligence and cloud computing will drive a $1 trillion market for leased-up properties within five years.
Leasing by data center suppliers this year has increased to about 10% of total logistics leasing volume, up from less than 5% a year ago, according to Prologis.
Despite the ongoing war in Iran that has disrupted the global flow of oil, March was “a very active month” for new leasing, CEO Dan Letter told analysts.
“While the geopolitical backdrop has become more uncertain in recent weeks, our business continues to perform at a very high level,” Letter said. “Our lease signings, proposal volume and build-to-suit pipeline point to continued strength and underlying demand.”
Global data center efforts
This time last year, businesses abruptly halted deals amid tariff-related uncertainty before activity gradually thawed in the following weeks and months, Letter added.
Prologis has effectively “sold out” of warehouses sized 500,000 square feet or more, prompting some customers to pursue custom build-to-suit developments or lease smaller buildings, Prologis executives said.
To capitalize on the rising demand for the made-to-order projects, the firm last month announced a deal to team up with Singapore’s sovereign wealth fund GIC to buy and build $1.6 billion worth of projects across the U.S.
This month, Prologis and Canadian institutional investor La Caisse said they are forming a pan-European joint venture focused on acquiring, developing and operating warehouses.
Overall U.S. logistics leasing remains healthy on an annualized basis, with the total number of transactions running just below the five-year average prior to the pandemic, said Juan Arias, CoStar’s national director of industrial analytics.
While most of the deals this year have been signed by small bay tenants, leases exceeding 100,000 square feet are running about 25% higher than pre-pandemic levels, Arias said.
Data center logistics
Firms tied to U.S. data center construction are making up “an even greater share of the forward-looking pipeline” for Prologis as suppliers move their distribution centers to be closer to data center developments, Caton added.
The trend is playing out in cities such as Dallas-Fort Worth, where data center development is shoring up logistics as slower population and housing market growth cut into overall warehouse demand, CoStar’s Arias said.
Tenants tied to electrical power infrastructure and data center supplies should remain active in the year ahead, with at least 11 data centers underway in the Dallas Metroplex, Arias said.
The two Prologis projects started in the first quarter are slated to add 350 megawatts of power capacity to the firm’s data center pipeline, the company said.
The firm had 5.6 gigawatts of power either secured or in advanced stages as of March 31.
“The depth of customer interest for our data center offerings is significant,” Letter told analysts. “We believe our ability to bring together land, power and development expertise is a key differentiator for our business.”