Companies & Markets Oct 15, 2026 · 7 min read

Prologis says the spare warehouse space is gone

The warehouse cushion is gone. Price 2027 storage accordingly. Warehouse landlord Prologis ended Q3 2026 with its portfolio 95.6% full, its results show. CEO Daniel S. Letter: “Customers are running lean on inventory, and excess capacity within their networks has largely cleared.” Our view: the cheap-space period of 2023-2025 is over. Prologis says leases starting in the quarter carried cash rents 23.4% above the ones they replaced. Cushman & Wakefield puts US industrial vacancy at 6.8%, its lowest since end-2024. For forwarders, that means dearer contract warehousing and less room to absorb tariff-driven stockpiling. Our call: US vacancy prints 6.7% or lower when Q4 data lands in January.

Prologis says the spare warehouse space is gone. Forwarders should price 2027 like it.
Prologis, the warehouse landlord, said on 15 October 2026 that its portfolio ended the third quarter 95.6% occupied. Its chief executive, Daniel S. Letter, gave the reason in one sentence: “Customers are running lean on inventory, and excess capacity within their networks has largely cleared.”
That sentence matters more than the occupancy figure. Here is our view. Through 2023, 2024 and much of 2025, shippers sat on surplus warehouse space they had leased during the pandemic boom. That surplus kept rents soft and gave everyone a buffer. Stock could be pulled forward ahead of a tariff, or held back when demand dipped, without signing a new lease. Prologis is now saying that buffer is gone. When a shipper needs more space in 2027, it will mostly mean a new lease at today’s rents, not a shuffle of space it already pays for.
For forwarders who sell warehousing, cross-docking and contract logistics, that shifts pricing power on renewals back towards landlords. For everyone moving freight, it means less stock in sheds to cushion the next shock.

What Prologis reported

All figures below are from Prologis’s third-quarter release, published 15 October.

Occupancy at period end was 95.6%. The average across the quarter was 95.1%.

Leases that started in the quarter covered 55.9m sq ft. Letter said the company signed 60m sq ft of leases in the quarter.

Retention was 75.9%. That is the share of tenants with expiring leases who chose to stay.

Rent change was 38.0% on a net effective basis and 23.4% on a cash basis. Rent change compares the rent on a new or renewed lease with the rent on the lease it replaces. Net effective spreads out incentives such as rent-free months. Cash compares the first-year cheque with the last.

Core funds from operations, the main profit measure for property trusts, was $1.60 a share, up from $1.49 a year earlier.

Development starts in the quarter were $964m, at an estimated 6.6% average yield.

Prologis also changed its 2026 guidance. It raised development starts to $5.0-5.75bn, from $4.5-5.5bn. It raised acquisitions to $2.1-2.3bn, from $1.5-2.0bn. It raised cash same-store net operating income growth to 7.0-7.5%, from 6.75-7.25%. That measure is rent minus property costs, on buildings owned in both periods. It narrowed core funds from operations to $6.25-6.29 a share, from $6.22-6.30.
Not everything went up. Prologis cut its net earnings guidance to $4.05-4.15 a share, from $4.40-4.55. It also trimmed the top of its average occupancy range to 95.25-95.50%, from 95.25-95.75%.
On demand, Letter said: “We see healthy demand supported by e-commerce, advanced manufacturing and the build-out of the data center supply chain.” That last group matters for forwarders. Our read: data-centre supply chains are now one more group competing with retailers and importers for big sheds.

The trend since July

Compare this with Prologis’s second-quarter release on 16 July. Period-end occupancy was 95.5% then. Retention was 72.7%. Net effective rent change was 36.9%, and cash rent change 22.3%.
So every one of those measures edged up in three months. Development-starts guidance has now been raised twice in a row. In July, Prologis lifted it to $4.5-5.5bn, from $3.5-4.5bn. A landlord that keeps raising how much it plans to build is telling you it expects tenants to take the space.

The wider market agrees, with a catch

Cushman & Wakefield’s third-quarter figures, reported by Food Logistics on 11 October, point the same way. US industrial vacancy fell to 6.8%. That is 20 basis points (0.2 percentage points) below its late-2025 peak, and the lowest level since the end of 2024. Net absorption reached 76.6m sq ft. That is space newly occupied minus space vacated, and the quarter was the strongest since the first quarter of 2023. Asking rents rose 4% year on year.
Jason Price, who heads Americas logistics and industrial research at Cushman & Wakefield, said: “Demand has now outpaced new supply for two consecutive quarters”.
Here is the catch. Cushman also counts about 324m sq ft under construction, up 23% year on year and the highest since mid-2024. About 64m sq ft was completed in the third quarter alone. Price added: “Newer, highly functional facilities continue to capture the majority of demand”.
Our read is that this is a two-tier market. Modern buildings near ports, rail hubs and big cities are tight, and that is where Prologis’s portfolio sits. By our arithmetic, Cushman’s 6.8% vacancy means the wider US market is about 93% occupied. That is a few points below Prologis. Older, smaller or badly placed buildings still have room, and the new pipeline will add more in 2027.

What happened last time

Two years ago the tone was very different. In October 2024, FreightWaves reported that Prologis expected the “current downturn in warehouse leasing demand will likely extend into the middle of next year”. Management described customers who “are very engaged, but they’re just not making decisions.”
Prologis’s occupancy then was 95.9%, higher than today’s 95.6%. So the landlord’s own buildings are not fuller than in 2024. What has changed is the direction, and where the spare room sits. In 2024, by our reading, the slack was inside customers’ own networks: space they already paid for but did not need. Now Prologis says that slack has cleared.
FreightWaves also reported that Prologis said in 2024 its occupancy beat the broader market by 300 basis points. By our arithmetic the gap is a little smaller today, at about 2.4 percentage points against Cushman’s national figure. The difference is that the market is now tightening, not loosening.
The national numbers show that turn quarter by quarter. ConstructConnect, citing Cushman & Wakefield, reported on 22 July that US industrial vacancy fell 10 basis points to 6.9% in the second quarter. More than 305m sq ft was under construction then. Three months later vacancy is 6.8%, and the pipeline is 324m sq ft. Demand is rising, and so is the building that will meet it.
Rent change tells a second story. In the third quarter of 2024, Prologis’s net effective rent change was 67.8%, according to FreightWaves. Today it is 38.0%. Our explanation: leases expiring now were signed more recently, closer to today’s rents, so the jump on renewal is smaller. It is still large. A 23.4% cash uplift on a renewal is a cost line no shipper can ignore.

What it means for forwarders

This is our view of where it leads.
Contract logistics pricing first. Rent is a major fixed cost in a warehousing contract. If your building’s lease rolls in 2027, assume a double-digit increase at renewal in good locations, not the 4% national asking-rent growth Cushman reports. Build rent pass-through or escalator clauses into multi-year storage quotes. Avoid fixed storage rates beyond 12 months unless your own lease is fixed for longer.
Tariff front-loading gets harder. When shippers rushed imports ahead of tariff dates, spare space inside their own networks took the extra boxes. With that space gone, the next pull-forward needs overflow storage, and that will cost more. Expect more demand for short-term and pop-up storage, and for forwarders who can offer it.
Lean stock means disruption hits faster. Inventory that is “running lean”, in Letter’s words, leaves less to draw on when a vessel is late or a port slows. That tends to push urgent volumes into air freight and expedited trucking. Forwarders with air and road capacity to hand are best placed to catch that.
New space exists, at a price. The 324m sq ft pipeline means a shipper that needs a large, modern building can usually find one. It will likely sign at today’s rents, and it may be in a different market from where it is now. That shifts trucking and drayage patterns. Drayage is the short truck move between a port and a warehouse. Forwarders who move early on those shifts win the inland legs.
Europe may follow. Letter said shareholder approval for the SEGRO deal, which Prologis says will expand its platform in Europe, “was an important milestone in bringing our two companies together.” We think a bigger Prologis in Europe would bring the same pricing discipline to more European renewals.

Our call

Our prediction: when Prologis reports fourth-quarter results, which we expect in mid-January 2027, period-end occupancy will be 95.6% or higher. Its first 2027 guidance will put development starts above this year’s new top end of $5.75bn. Cushman & Wakefield’s fourth-quarter US industrial vacancy, due in January, will come in at 6.7% or lower.
What would prove us wrong is a fresh trade shock that makes shippers stop deciding again, as they did in 2024. Short of that, forwarders should price 2027 warehousing as a landlord’s market in the buildings their customers actually want.

Sources