Prologis Shows Strength in Q2 2025 With Build-to-Suit Strategy
By Andres Cisneros-Romo
July 17, 2025
Despite a cooling industrial market nationwide, Prologis reported strong operational results in Q2 2025. Leaning into pre-leased, build-to-suit development and maintaining stable occupancy as national vacancy rates rise.
Prologis is the world’s largest logistics real estate company, specializing in the development, ownership, and operation of high-quality industrial properties. The company’s global portfolio supports supply chain operations for e-commerce, retail, manufacturing, and transportation customers.
Revenue and Core Earnings Outperform
Prologis generated $2.18 billion in revenue in Q2, up from $2.01 billion last year and beating analyst expectations. While net income dropped 33.7% to $571 million due largely to reduced real estate gains and foreign exchange losses. Core Funds from Operations (FFO) rose 9% year-over-year to $1.46 per share.
That metric, closely watched by real estate investors, prompted Prologis to raise its full-year FFO guidance to a range of $5.75 to $5.80.
Leasing, Occupancy, and Rents Stay Strong
Operationally, Prologis continues to outperform its peers:
- Occupancy held steady at 95.1%
- Leased 51.2 million square feet in the quarter, with a 74.9% retention rate
- Cash same-store NOI grew 4.9%
- Net effective rents surged 53.4%, with cash rents up 34.8%
These figures underscore the strength of Prologis’ global logistics portfolio, even as industrial absorption slows in some U.S. markets.
Development Focus: Pre-Leased, Build-to-Suit
Facing a more cautious industrial environment, Prologis shifted development strategy toward build-to-suit projects, custom-designed and pre-leased properties. In Q2, the company:
- Broke ground on $846 million in development starts
- 62.7% of new development was pre-leased
- Completed $192 million in stabilized properties at a 6.9% yield
Management also raised full-year development guidance to $2.25–2.75 billion, up from $1.5–2 billion.
Recent Projects
Prologis’s recent pipeline shows momentum in two areas:
- Build‑to‑Suit Warehouses
– Over $900 million in new development starts during Q2, nearly triple Q2 2024 levels.
– Approximately 65% of this was build‑to‑suit, pre‑leased to major retailers, consumer goods companies, and auto parts manufacturers. - Strategic Data‑Center Adjacent Projects
– In the first half of 2025, $1.1 billion of build‑to‑suit starts included approximately $300 million earmarked for continued data‑center infrastructure expansion in Austin, TX, anchored by a top-tier hyperscale.
These developments demonstrate Prologis’s ability to capture high-demand, industry-specific spaces — leveraging its scale and customer relationships.
Balance Sheet: Strong and Flexible
Prologis remains well-capitalized:
- $7.1 billion in available liquidity
- Debt/EBITDA at 5.1x
- Issued $5.8 billion in new debt this year at 4.5% average interest
- Weighted average debt maturity: 8.5 years
This financial flexibility enables Prologis to navigate interest rate volatility and continue deploying capital into high-yield opportunities.
Outlook: Navigating a Softer Market with Confidence
While national warehouse vacancy hit a 10-year high of 7.1% in Q2, Prologis appears insulated thanks to its disciplined, pre-leased development model and global customer base.
In an industrial market that’s shifting from speculative growth to performance-driven execution, Prologis is leaning into its strengths: scale, data, and discipline.
Sources:
📌 Prologis Q2 2025 Earnings Release
📌 Wall Street Journal – Prologis ramps up plans for new warehouse construction
📌 Mortgage News Daily & Mitrade Analysis
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