“Demand for space is actually increasing because ecommerce is growing much more rapidly than it was before,” says global logistics real estate company Prologis CEO Hamid Moghadam. “We probably got three, four, or five years of growth in a quarter or two. Ecommerce is a big tailwind for our business. It’s a pretty good business otherwise but ecommerce just supercharges it.”
Hamid Moghadam, chairman, and CEO of Prologis, the global leader in logistics real estate, while discussing their earnings release says the pandemic has rapidly accelerated the growth of ecommerce worldwide:
Ecommerce Is Growing Much More Rapidly Than Before
We started the year with a very optimistic outlook and of course, all of that was before COVID. When we got to the first-quarter results, they were strong, but we softened our outlook a bit because nobody really knew what we were facing. As the business has progressed in the second quarter we’re finding that demand for space is actually increasing because ecommerce is growing much more rapidly than it was before.
We probably got three, four, or five years of growth in a quarter or two. Ecommerce is a big tailwind for our business. It’s a pretty good business otherwise but ecommerce just supercharges it.
Our Business Is Vital To The Supply Chain
We run a global business. If you look at our collections globally, the US is actually stronger than the global numbers. But if you look at the overall numbers they are actually running better than last year which was a record year. You might ask why in an environment like this that collections are running ahead of last year? The reason is pretty simple. Our business is vital to the supply chain. Even people whose businesses are not doing well have to keep their inventory somewhere and that’s usually in one of our buildings.
An interesting statistic is that 2.5 percent of global GDP goes through our billion square feet around the world. We’ve got pretty good visibility as to what’s going on in the global economy. Both on the good end and the soft end people need inventory and a place to store their goods.
Houston Is The Softest Market In The US
Houston is probably the softest market in the US. Globally, I would have to say France is probably one of the weaker markets. But generally, through this cycle, we’ve held up pretty well around the world. The primary reason is that unlike other cycles supply of space was very tight going into this downturn. Vacancies were under five percent and utilization rates were in the mid-80s. Both of those are records.
I’ve been doing this for about 37 years and those are numbers that are unprecedented in our business. Unprecedented good.