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Our ApproachMarket Insight #1: Prologis Anticipates Increased U.S. Warehouse Demand Amid Trade Uncertainties
Prologis, the world’s largest industrial real estate company, projects a surge in U.S. warehouse demand as companies adjust to ongoing global trade tensions. Firms like Amazon, Home Depot, and FedEx are proactively securing additional storage space to mitigate tariff impacts and ensure goods are closer to consumers. Despite a recent slowdown in leasing activity and a rise in warehouse vacancy rates to 7% in Q1 2025, Prologis reported a 9.2% revenue increase to $2.14 billion and net earnings of $592 million. The company maintains its full-year earnings guidance, anticipating benefits from reduced warehouse construction limiting supply and sustaining rental rates. (wsj.com)
Market Insight #2: Global Economic Growth Slows Amid Escalating Trade Tensions
The global economic outlook has weakened, with the OECD revising its growth forecast downward to 2.9% for both 2025 and 2026, the lowest since the COVID-19 pandemic. This slowdown is primarily attributed to escalating trade tensions, particularly the U.S. administration’s recent tariff increases, which have raised average effective tariff rates to over 15%, the highest since World War II. These protectionist measures are dampening investment, disrupting supply chains, and increasing inflationary pressures worldwide.
In the United States, GDP growth is projected to decline from 2.8% in 2024 to 1.6% in 2025 and 1.5% in 2026, with inflation expected to reach nearly 4%, potentially delaying Federal Reserve rate cuts. Other G20 nations, including China, India, Japan, the UK, and France, also face downgraded growth forecasts. The OECD emphasizes the urgent need for trade agreements and increased investment to support global recovery.
Investor Concept of the Week: Navigating Industrial Real Estate Amid Global Economic Uncertainty
The current landscape presents both challenges and opportunities for investors in industrial real estate.
Key Insights:
- Trade Policy Impacts: Uncertainties surrounding trade agreements are influencing investment decisions in key industrial regions.
- Market Resilience: Despite these uncertainties, the industrial sector continues to demonstrate resilience, with significant transaction volumes and sustained investor interest.
Investor Strategy:
Investors should monitor trade policy developments closely, as resolutions could unlock pent-up demand and investment opportunities. Diversifying portfolios to include regions with strong fundamentals and adaptability to policy shifts can mitigate risks. Additionally, staying informed about macroeconomic trends will be crucial in making strategic investment decisions.
Final Thoughts
As we navigate the complexities of trade policies and global economic shifts, staying informed and adaptable remains paramount. The industrial real estate sector continues to offer opportunities for strategic investors. At Hanson Capital, we are committed to providing insights and guidance to help you make informed investment decisions in this evolving landscape. We’re spending our entire focus looking for opportunities in a challenging marketplace, but that challenge is what we believe creates the opportunity for great success. Tomorrow we’ll be sending our May activity report and there are certainly some interesting updates.
