Dive Brief:
- U.S. logistics real estate rents fell 4.5% year over year in 2025 as subdued demand and a push for more cost-efficient locations weighed on pricing, according to Jan. 29 research from warehouse giant Prologis.
- Coastal markets took the brunt of the impact with rent declines of 7.6% YoY, while inland markets fared better, posting a 3% drop YoY. Top rent growth markets in 2025 included Houston, Indianapolis and Nashville, Tennssee, Prologis said.
- The overall drop in prices wasn't as sharp as 2024, when U.S. rents declined 6.5% year over year. Trends suggest a potential rebound this year as renters could "reemphasize speed to market and the need to control rising transportation costs," per Prologis.
Dive Insight:
Warehouse tenants pursued newly completed and large-format facilities with lower rental rates — often located in more distant markets — throughout 2025 to advance cost-efficiency goals, according to Prologis.
"Driven by cyclical forces, low freight rates and a front-loading inventory strategy facilitated the trade-off between building quality and proximity to the largest consumer pools," Prologis said.
The pricing environment may turn less favorable for logistics real estate tenants in 2026. Demand heated up in the second half of last year as companies began feeling more comfortable making long-term leasing choices despite the specter of tariffs and trade uncertainty. Net absorption outpaced new supply in Q4, pushing vacancy rates down quarter over quarter to 7.4%, Prologis said Feb. 3.
"Limited speculative deliveries and faster lease execution is setting the stage for a new phase of competition for space as networks expand to meet growth and structural supply chain needs," Prologis said.
Large retailers with e-commerce operations in particular are helping fuel demand as they expand their networks to trim delivery times and boost efficiency, CFO Tim Arndt said on an earnings call last month. E-commerce represented approximately 20% of Prologis' new leasing activity over the past year, "making 2025 its best year since 2021," he said.
"Improved customer sentiment, together with better-than-expected market conditions, reinforces our view that vacancy has peaked and rents are beginning to inflect across many markets," Arndt added.
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