The recent increase in e-commerce parcel volumes may signal a quiet resurgence in the logistics real estate market. According to the latest Industrial Business Indicator (IBI) report from Prologis, demand for logistics properties appears to have reached an inflection point and is beginning to rebound.
The IBI index serves as a key metric for assessing the health of the logistics real estate sector. In the third quarter, the IBI activity index registered at 53, indicating improved market activity. Three primary factors contributed to this uptick:
- Increased net absorption: The difference between newly leased logistics space and vacated properties has grown, demonstrating rising demand for industrial real estate.
- Higher new lease signings: The uptick in new contracts reflects growing business confidence, with more companies preparing to expand their logistics infrastructure for future growth.
- Strong pipeline of proposed projects: The healthy number of planned developments indicates market optimism about future demand and developer willingness to increase investments.
Compared to 2024 averages, all three indicators showed healthier performance in Q3, collectively driving the IBI index upward. However, the report notes that recovery won't follow a linear path due to trade volatility, with supply chain activity expected to peak in early 2025.
Large Corporations Lead the Recovery
The report identifies major corporations and e-commerce companies as the primary drivers of this recovery. These entities typically possess stronger financial resources and sharper market insights, enabling them to capitalize on emerging opportunities by expanding their logistics footprints. The analysis suggests other businesses will likely follow suit, contributing to broader market recovery.
The Prologis IBI report delivers an optimistic outlook: the logistics real estate market may have bottomed out and begun its recovery. While the path forward may be uneven, the initial momentum from large enterprises and e-commerce operators, followed by broader market participation, suggests promising prospects for the sector's future.