While e-commerce giants accelerate their expansion with brightly lit warehouses and constant truck traffic, traditional retailers remain hesitant. The latest Prologis Industrial Business Indicator (IBI) data sheds light on where the logistics real estate market is headed.
A Significant Market Shift
The Prologis IBI index recorded a reading of 53 in the third quarter, signaling a crucial turning point for logistics real estate demand. This shift is primarily driven by improvements in net absorption, new lease signings, and project pipelines—all showing healthier growth compared to 2024 averages. After a period of adjustment, the market is regaining momentum.
Growth Amid Challenges
The report also highlights potential challenges. Supply chain activity peaked in early 2025 before declining due to trade volatility, resulting in a nonlinear recovery pattern. Large corporations and e-commerce companies are leading this growth wave, with other businesses expected to follow gradually.
Key indicators reveal important trends: rising net absorption demonstrates growing demand for existing logistics space; active new lease signings reflect business optimism about future expansion; and increasing project pipelines show developer confidence in preparing new facilities to meet anticipated needs.
E-Commerce as Primary Growth Engine
The continued expansion of e-commerce remains a major driver of logistics real estate demand. As online shopping becomes increasingly prevalent, retailers require more warehouses and distribution centers to support growing operations. Large enterprises are also optimizing their supply chains for greater efficiency and cost reduction, further fueling demand.
Navigating Uncertainty
Trade volatility continues to create market uncertainty. Businesses must monitor international trade developments closely to adjust supply chain strategies accordingly. Developers should carefully assess market risks to avoid overinvestment during this recovery period.
The Prologis IBI data indicates that logistics real estate demand has reached a pivotal juncture. While challenges persist, the overall outlook remains positive as e-commerce and large corporations drive growth. Market participants should seize emerging opportunities while addressing potential obstacles to achieve sustainable development.