P: Supply chain predictions for 2023

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Leveraging “decades of industry experience and proprietary data”, Prologis Research predicts the following seven non-pandemic trends for 2023:

(“And check out how we did with our 2022 predictions at the end of this report.”)

Prediction #1
U.S. warehouse development starts will drop to a seven-year low, even as rent growth exceeds 10%.

Prediction #2
California’s barriers to development will permanently constrain logistics demand, allowing Texas to become the #1 state for net absorption.

Prediction #3
Mexico demand will hit a new annual record as nearshoring drives expansion along the border.

Prediction #4
India will rise from fourth to the third-most-active country for development starts, behind the U.S. and China.

Prediction #5
Build-to-suit rents will reach new levels in the U.S. and EU as market rents are capitalized at 5%, despite falling land and construction costs.

Prediction #6
E-commerce leasing will bounce back to become the second-most-active year on record (after 2021).

Prediction #7
Demand for sustainable warehouses will grow rapidly. Installed rooftop solar capacity will double, and EV truck charging capacity will exceed 10 megawatts.

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(Full details, with charts and key stats, are here.)

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A LOOK BACK

What did we get right and wrong in 2022?

✓ Demand would match supply and keep vacancy at a historic low.  

✓ E-commerce growth would slow and then re-accelerate.  

✓ Supply chain disruptions would persist through 2022.  

✓ Inventories would grow by double-digits to meet sales and begin to build in resilience.  

X U.S. rent growth would slow to 10% from 2021’s 20% pace. 2022 rent growth is expected to total more than 30% in the U.S. and 25% globally.