Key Takeaways
- • Logistics real estate demand has reached an inflection point, with net absorption, new lease signings, and build-to-suit activity showing marked improvement after a period of contraction.
- • Big-box leasing more than doubled year-over-year, and demand exceeded new supply for the first time since 2022, signaling a fundamental shift in market dynamics.
- • Prologis reports that 60% of its customer base is actively expanding, with particular strength in home-related verticals, reflecting structural shifts driven by reshoring, nearshoring, and evolving supply chain strategies.
- • Vacancy rates are declining as disciplined supply growth fails to keep pace with sustained demand across the 13 largest logistics markets, positioning scarcity and rent growth as key drivers for the sector.
- • Supply completions are expected to fall short of demand in most locations over the next decade, underpinned by land scarcity and sustained consumer spending patterns documented in Mastercard SpendingPulse data from September 2025.
Summary
The logistics real estate sector has shifted from a period of oversupply and contraction to renewed demand strength, marking a critical inflection point in the market cycle. According to Prologis research and corroborating data from CBRE, JLL, Cushman & Wakefield, and Colliers, demand has begun to outpace supply for the first time since 2022. This reversal is evidenced by improving net absorption figures, accelerating new lease signings, and a resurgence in build-to-suit activity across major markets. Big-box leasing—a bellwether for enterprise-scale logistics demand—has more than doubled on a year-over-year basis, underscoring the urgency with which tenants are securing warehouse and distribution capacity.
The operational health of the sector reflects a fundamental rebalancing. Prologis's portfolio data reveals that 60% of its customer base is in expansion mode, a substantial shift from prior periods of consolidation and right-sizing. Verticals demonstrating the strongest momentum include home-related categories, a cohort that has benefited from sustained consumer spending as documented in the Mastercard SpendingPulse Survey for September 2025. Take-up across the 13 largest logistics markets substantially exceeds historical five-year averages, pointing to robust underlying demand rather than cyclical volatility.
Supply discipline has become a structural feature of the market. Projected completions across most major locations are expected to fall materially short of demand over the next decade, a function of land scarcity, regulatory constraints, and capital allocation decisions by developers. This structural imbalance creates sustained upward pressure on rents and land prices, benefiting incumbents and creating pricing power for landlords with prime logistics assets in high-velocity corridors. Vacancy rates are declining as a result, tightening market conditions and raising barriers to entry for new participants.
The demand drivers underlying this inflection are rooted in structural economic shifts rather than temporary cyclicality. Reshoring initiatives, nearshoring trends, and ongoing recalibration of global supply chains—coupled with energy and trade policy shifts—are fundamentally increasing demand for logistics footprint across North America. These forces suggest that the sector's renewed strength is supported by durable, multi-year tailwinds rather than inventory cycles or speculative leasing activity.
The operational health of the sector reflects a fundamental rebalancing. Prologis's portfolio data reveals that 60% of its customer base is in expansion mode, a substantial shift from prior periods of consolidation and right-sizing. Verticals demonstrating the strongest momentum include home-related categories, a cohort that has benefited from sustained consumer spending as documented in the Mastercard SpendingPulse Survey for September 2025. Take-up across the 13 largest logistics markets substantially exceeds historical five-year averages, pointing to robust underlying demand rather than cyclical volatility.
Supply discipline has become a structural feature of the market. Projected completions across most major locations are expected to fall materially short of demand over the next decade, a function of land scarcity, regulatory constraints, and capital allocation decisions by developers. This structural imbalance creates sustained upward pressure on rents and land prices, benefiting incumbents and creating pricing power for landlords with prime logistics assets in high-velocity corridors. Vacancy rates are declining as a result, tightening market conditions and raising barriers to entry for new participants.
The demand drivers underlying this inflection are rooted in structural economic shifts rather than temporary cyclicality. Reshoring initiatives, nearshoring trends, and ongoing recalibration of global supply chains—coupled with energy and trade policy shifts—are fundamentally increasing demand for logistics footprint across North America. These forces suggest that the sector's renewed strength is supported by durable, multi-year tailwinds rather than inventory cycles or speculative leasing activity.
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