Prologis is predicting that U.S. warehouse development starts will drop to a 7-year low, as rent growth exceeds 10%.
Starts are already 30% below their peak in Europe and Prologis expects that to continue in the US. The warehouse property owner says the rapid rise in the cost of capital is the culprit and starts will fall by 60% to less than 175 million square feet in 2023.
"A pullback of this magnitude would create a shortage of space in 2024," according to Prologis' report. "The pipeline will drop from over 500 million square feet in Q3 2022 to 275 by year-end 2023."
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