Real estate investment trusts specialising in warehouses and logistics properties have experienced a market setback, with US-listed Prologis shares tumbling approximately 12 per cent since early April, while CBRE Group’s stock has declined 8 per cent during the same period.
These industrial REITs had previously outperformed competitors with heavy exposure to offices and conventional storefronts as the pandemic transformed consumer consumption patterns and corporate supply chains.
Major retailers like Amazon and Walmart developed increasingly complex logistics networks requiring substantial storage space to operate efficiently.
Industry analysts now warn that this logistics concentration could become a vulnerability if the Trump administration maintains its recently announced tariffs, potentially slowing international trade.
With fewer goods being shipped from overseas, less storage will be needed domestically, leaving large warehouse landlords with excess capacity, according to analysts.
Prologis, which leases out 1.3 billion square feet of logistics properties across North and South America, Europe, and Asia, has acknowledged these risks in communications to investors.
The company said “economic instability, including government shutdowns and withdrawals from the European Union or other international trade alliances or agreements” as potential threats to its business model according to the WSJ.
The warehouse sector’s previous success was built on adapting to post-pandemic changes in retail and supply chain management.
As consumer behaviours shifted and companies restructured their distribution networks, warehouse operators found themselves in high demand, commanding premium rates for their facilities.
Market observers point out that the current trade tensions create a particularly challenging environment for logistics-focused real estate companies that expanded rapidly during the pandemic boom.
These firms now face the prospect of declining occupancy rates and potential downward pressure on leasing prices if international shipping volumes decrease.
The concentration on logistics could become a weakness if the Trump administration holds firm on recently announced tariffs and international trade slows.