Industrial Property Investors Ramp Up Acquisitions as Markets Stabilize and Growth Prospects Rise

Prologis and EQT Exeter doubling down on acquisitions, Miami and South Florida remain prime markets for long-term industrial investment

Photo from CoStar.com

By Michael Plasencia

WREV

November 19, 2024

Prologis: Anticipating Demand Growth

Prologis, the world’s largest warehouse owner and developer, is positioning itself for what it sees as an attractive acquisition market. Following a year of rising vacancies and slower rent growth, Prologis increased its acquisition budget 60%, to between $1.75 billion and $2.25 billion.

Prologis CFO Tim Arndt explained, “Our teams are scouring the market for opportunities… [as] the bottoming process is [underway].” With over 14 million square feet acquired in 2024 and a continued focus on high-demand markets, Prologis is preparing for a potential surge in tenant demand by mid-2025.

The company’s strategy reflects its confidence in a near-term demand rebound, especially as speculative development slows, and inventory growth stabilizes.

EQT Exeter: ‘A Compelling Time to Invest’

EQT Exeter, the real estate arm of Sweden’s EQT AB, is accelerating its capital deployment, seeing “a unique opportunity” to acquire properties amid market pressures. With private equity reserves at near-record levels, EQT Exeter has already increased spending through its U.S. industrial fund, anticipating competitive returns on new acquisitions. Recently appointed as EQT Exeter’s global head, Henry Steinberg emphasized this strategy is partly due to sellers adjusting expectations, noting, “The bid-ask spread didn’t close because our bids went up. Our math is the same, but now we're winning a lot more deals.”

EQT Exeter has been actively purchasing high-quality industrial properties, including a recent Amazon-leased last-mile delivery center in Seattle and a four-building portfolio near Columbus, Ohio. 

Future Industrial Market Trends

Both Prologis' and EQT Exeter’s strategies reflect a broader trend in the commercial real estate sector, where investor sentiment has shifted positively. Institutional investors have returned to the industrial market, according to Colliers’ recent report, however, the market remains cautious. Higher long-term Treasury yields, currently over 4%, continue to elevate borrowing costs, maintaining pressure on asset values.

Outlook: Disciplined Optimism

While investors must say disciplined in their underwriting and due diligence, it appears the worst as it relates to falling asset values may be behind us. With major industry players like Prologis and EQT Exeter significantly increasing their acquisition activities, Miami and South Florida continue to stand out as prime markets for long-term industrial investment. The region’s strong local demand, continued rent growth, and vacancy rates below the national average position South Florida as a key market in the U.S. logistics sector.

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For further reading on Miami's Q3 2024 market performance, see Cushman & Wakefield’s Report, and for details on Prologis and EQT Exeter’s recent moves, visit costar.com.