Despite ongoing market uncertainty, Prologis has reported strong development activity during the second quarter of 2025, driven largely by build-to-suit projects in the U.S. and Europe.
On the company’s July 16 earnings call, Chief Financial Officer Timothy Arndt detailed a wave of development activity across the United States and Europe. “In terms of capital deployment, we started over $900 million in new development starts, nearly 65% of which was build-to-suit activity across seven additional projects,” Arndt said, according to a transcript provided by S&P Global Market Intelligence.
“Beyond this activity, we have signed agreements for an additional three build-to-suits post quarter end. Our build-to-suit starts for the first half totaled $1.1 billion, which is the largest start to a year that we have ever had,” he added.
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This impressive push came despite ongoing macroeconomic and geopolitical turbulence. Arndt described the operating environment as one that's bringing “constant uncertainty,” referencing a series of destabilizing events that have swept through the market.
“Last year, it was all about Ukraine and whether the Fed was going to cost—I guess going back 18 months. That was the uncertainty,” Arndt said. “Then when the election was settled, there was a lot of excitement about pro-business policies and the like. And then basically, you had April 2, the ‘Liberation Day.’ So, I mean, it is very, very difficult to predict anything for any length of time,” he continued.
“But with every passing day, there's more water building up behind the dam, and we're seeing evidence of this with the largest customers. They just can't basically go to sleep without taking more space. So that’s what we’re seeing—their ability to defer is getting reduced with every passing day.”
In response to changing market signals, Prologis adjusted several components of its 2025 guidance. The company lowered its earnings per share expectations from a range of $3.25 to $3.70 to $3 to $3.15. However, it raised its projection for core funds from operations, nudging the range up to $5.75–$5.80 from the previous $5.65–$5.81. It also significantly increased its forecast for development starts, from an initial range of $1.5 billion to $2 billion to $2.25 billion to $2.75 billion. Planned acquisitions were also revised upward, from a prior estimate of $750 million to $1.25 billion, to a tighter range of $1 billion to $1.25 billion.
While some in the industrial sector adopt a cautious stance in the face of global headwinds, Prologis is leaning into strategic development. Chairman and CEO Hamid Moghadam emphasized the significance of the company’s build-to-suit pipeline, saying, “I'm going to go on a limb and say, this is the strongest it’s been in my career.” Looking further down the road, Moghadam added, “People who can plan in the long term are also, I think, thinking the way I’m thinking about it, which is they’re looking at a couple of years—by the time these projects are fully operational. And they look at the factors driving the long-term health of their business, like e-commerce and things like that, and they’re feeling good about it.”
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