P: Supply chain predictions for 2023

09/12/2022

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.

(…)

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

(…)

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.