Prologis has teamed up with Singapore's sovereign wealth fund in a $1.6 billion joint venture to buy and build logistics facilities in the latest sign that the U.S. industrial property market may be ripe for a rebound.
The deal with GIC is expected to fund development and acquisition of a 4.1 million-square-foot portfolio of build-to-suit projects across the country, with "additional capacity for future investments," San Francisco-based Prologis said Thursday.
Prologis, the world's largest logistics real estate company, will operate the venture under its asset management business, called Prologis Strategic Capital.
"This joint venture with GIC builds on that momentum by pairing our platform and development expertise with a partner that shares our long-term perspective."
Prologis and other industrial developers have pivoted toward specialized projects that are built for such customers as Amazon to minimize the financial risk of building facilities on speculation without signed tenants.
Build-to-suit projects accounted for 61% of the real estate investment trust's total development starts last year with a value of $3.1 billion, Prologis executives said during the firm's latest earnings call.
"Build-to-suit activity continues to be one of the clearest signals of customer conviction across our business," Prologis Chief Executive Officer Dan Letter said in a statement. "This joint venture with GIC builds on that momentum by pairing our platform and development expertise with a partner that shares our long-term perspective."
The nation's overhang of space after a record wave of warehouse construction — along with volatile trade tariffs and geopolitical risks such as wars and other global conflicts — has kept many speculative developers on the sidelines, said Juan Arias, CoStar’s national director of industrial analytics.
"This has pushed many developers to take a wait-and-see approach on new construction — tilting towards more build-to-suit projects rather than speculative construction," Arias said.
While warehouse demand improved at the end of 2025, it was largely focused on newer build-to-suit properties larger than 500,000 square feet, while new midsize properties saw a continued rise in vacancies, Arias said.
The national vacancy rate in the industrial sector has risen steadily for nearly three years, reaching 7.6% near the end of this year's first quarter, according to CoStar research.
"For now, we are still awaiting the inflection point for vacancy rates, which could lead to an eventual recovery in rent growth," Arias added.
The Prologis venture is the second large deal of its kind this year for GIC, one of the world’s largest institutional investors in real estate.
In January, the wealth fund partnered with San Diego-based real estate investment trust Realty Income for a $1.5 billion venture focused on build-to-suit logistics development in the U.S. and Mexico.
"With strong e-commerce growth, the re-shoring of supply chains and resilient consumer spending, industrial remains a strong long-term investment theme in North America," Goh Chin Kiong, GIC's chief investment officer of real estate, said in a statement.