Prologis (NYSE:PLD) reported first-quarter 2026 results that management said reflected “solid momentum” across leasing, development, and strategic capital activity, while acknowledging a more uncertain geopolitical backdrop.
Record leasing and occupancy outperformance
CEO Dan Letter said the company delivered “another quarter of record leasing,” totaling 64 million square feet of signings in the period. CFO Tim Arndt said quarter-end occupancy was 95.3%, reflecting what the company described as a typical seasonal first-quarter decline, but still exceeded internal expectations and supported a higher full-year forecast for average occupancy of 95% to 95.75%.
Arndt said the company’s expectation for full-year net effective rent change “to approach 40%” was unchanged. Lease mark-to-market ended the quarter at 17% on a net effective basis, and Arndt said the decline in mark-to-market has “slowed meaningfully,” helped by an uptick in market rents during the quarter—the “first increase in two and a half years.”
Same-store growth and market conditions
Prologis posted same-store net operating income growth of 6.1% on a net effective basis and 8.8% on a cash basis. Arndt said results benefited from year-over-year occupancy improvement, a growing contribution from rent change, and “unusually low bad debt.”
In updated guidance, the company raised its expectation for net effective same-store growth to 4.75% to 5.5% and cash growth to 6.25% to 7%. In Q&A, management said the first-quarter cash same-store strength reflected favorable occupancy comparisons, and that those effects diminish as prior-year occupancy gains roll through the year, while rent change remains a key driver.
On fundamentals, Managing Director Chris Caton said Prologis’ view is “unchanged,” describing the market as moving through an “inflection phase,” with demand strengthening and vacancy topping out. Caton cited expectations for net absorption “on pace to approach 200 million square feet” and completions of about 190 million square feet in 2026, while noting macro conditions may evolve based on the “magnitude and duration” of the Middle East conflict.
Caton said U.S. markets absorbed 45 million square feet in the quarter on a seasonally adjusted basis, slightly ahead of forecast, while U.S. vacancy was flat sequentially at 7.5%. He also noted the construction pipeline remains “favorable” at 1.7% of stock versus a 10-year average of 2.6%. Globally, management said market rents grew 30 basis points in the quarter, but emphasized that rent growth is still uneven and “a bit too early for broad-based and sustained growth.”
Management highlighted stronger growth in U.S. central and southeast markets and identified Latin America, Western Europe, the U.K., and Japan as international standouts. In the U.S., Caton called out Los Angeles County and Seattle as the “two softest markets,” with elevated vacancy and muted demand. He said the company is “upgrading” views on markets including New York/New Jersey and the San Francisco Bay Area, but said it is “not quite yet” time for rent growth there.
On Southern California, management reiterated it is improving but lagging other markets, with demand picking up and some pockets firming, though broad-based rent increases are not yet evident. Letter emphasized the region’s scale and barriers to new supply, saying the company expects Southern California to “tail” the broader market by “2–3 quarters.”
Data centers, energy, and development activity
Letter and Arndt emphasized continued expansion beyond traditional logistics into data centers and energy. Prologis started $2.1 billion of new development in the quarter, including $850 million in logistics and $1.3 billion in two data center projects. Arndt said about 75% of logistics starts were speculative, reflecting improving fundamentals and confidence in the need for new supply.
Arndt said the two data center starts totaled 350 MW and included one ground-up development at an existing campus and one conversion from the company’s portfolio. He said both are pre-leased on a long-term basis to “leading technology companies” with investment-grade credit. Management also discussed supply chain constraints for data center equipment; in response to BTIG’s Thomas Catherwood, Letter said Prologis’ procurement capabilities and “fortress” balance sheet allow it to get ahead of long-lead items, which management views as a differentiator in build-to-suit execution.
On pipeline and customer demand, Letter said the company has 1.3 GW under LOI and is “making further progress converting the pipeline,” adding that what is in hand “accounts for the next three years worth of business.” Caton said customer decision-making is “marginally slower,” but leasing activity remains robust and the company has not seen meaningful evidence of pullback.
Management provided additional detail on power capacity and potential investment scale. Arndt said Prologis ended the quarter with 5.6 GW of energy “either secured or in advanced stages,” including the stabilization of a 150-MW facility. He said that at an assumed “power shell” format of $3 million per MW, the pipeline “could provide well over $15 billion of investment,” and potentially more in turnkey formats. On a clarification question, management said the reported megawatts reflect “utility load,” and Arndt said about “two-thirds” would be critical load.
On development economics, management said data center margins remain in the range previously discussed at 25% to 50%, with Letter later clarifying that “margins are actually 25%–50%,” describing them as “very profitable deals.”
The company also highlighted growth in its solar and storage business, saying it completed 42 projects in the quarter, reaching 1.3 GW of installed capacity.
Strategic capital, capital recycling, and balance sheet
Letter said Prologis is expanding its strategic capital platform, including a $1.6 billion joint venture with GIC and, after quarter end, a $1.2 billion joint venture with La Caisse. Arndt said the company raised more than $2.6 billion of third-party equity across recently announced ventures, including the U.S. Agility fund and other vehicles, aligning capital with investment opportunities “in a more accretive format.” In response to Goldman Sachs’ Caitlin Burrows, management described the recent pace of fund launches as purposeful, aiming to match growing deployment volumes in logistics and the “incredible data center opportunity” while improving capital efficiency and generating fees and promotes.
In capital recycling, Arndt said the company sold or contributed about $1.2 billion of assets in the quarter, including activity tied to the U.S. Agility Fund and seed assets for the new GIC venture.
On financing, Arndt said Prologis raised $5.5 billion in new financings during the quarter at a weighted average rate of about 3.75%, including a $3 billion recast of a credit facility at a spread of 63 basis points, which he said was the lowest of any REIT.
Guidance raised following first-quarter beat
Prologis reported first-quarter Core FFO of $1.50 per share including net promote expense, and $1.52 per share excluding it, both “ahead of our expectations,” according to Arndt. For the full year, the company raised guidance for:
- Net earnings: $3.80 to $4.05 per share
- Core FFO (including net promote expense): $6.07 to $6.23 per share
- Core FFO (excluding net promote expense): $6.12 to $6.28 per share
Arndt said the updated Core FFO outlook represented an “80 basis point increase” from the prior midpoint. Prologis also increased its forecast for development starts to $4.5 billion to $5.5 billion (owned and managed), with about 40% allocated to data center build-to-suits, while keeping acquisition guidance at $1 billion to $1.5 billion and projecting combined contributions and dispositions of $3.5 billion to $4.5 billion, all at the company’s share.
While addressing the geopolitical environment, Letter said the Middle East conflict has introduced additional uncertainty through higher energy prices and inflation and interest-rate pressure, but said leasing data and customer conversations have not shown meaningful changes in 2026 business plans to date. “The risk today is that uncertainty slows customer decision-making,” Letter said, adding that Prologis has not seen “meaningful evidence of that to date.”
About Prologis (NYSE:PLD)
Prologis, Inc is a real estate investment trust (REIT) specializing in logistics and distribution facilities. The company focuses on acquiring, developing, and managing high-quality industrial real estate assets that support supply chain infrastructure for third-party logistics providers, e-commerce businesses, retailers and manufacturers. Its portfolio primarily consists of warehouse and distribution centers designed to optimize goods movement and storage near key transportation hubs.
With a global presence, Prologis serves customers across the Americas, Europe and Asia Pacific.
