As global supply chains grow increasingly complex and energy demands continue to rise, the logistics real estate industry faces unprecedented opportunities and challenges. The traditional warehouse model no longer meets modern logistics needs, with intelligent, sustainable energy solutions emerging as key drivers of industry transformation.
Prologis, the world's leading logistics real estate investment trust, is actively embracing this change by reimagining future logistics centers as intelligent, sustainable energy hubs that power global supply chains. During the recent Groundbreakers conference, Prologis co-founder, chairman and CEO Hamid Moghadam engaged in a thought-provoking discussion with U.S. Secretary of the Interior Doug Burgum, focusing on energy reliability and artificial intelligence's critical impact on supply chains.
I. Energy: The Lifeline of Supply Chains
Energy serves as the lifeblood of modern economies and the critical enabler of efficient supply chain operations. As global trade expands and e-commerce flourishes, supply chains face growing energy requirements. However, unstable energy supplies, price volatility, and environmental pressures present significant challenges to supply chain stability and sustainability.
1.1 Energy Dominance and Abundant Supply
Secretary Burgum emphasized that the White House's energy strategy centers on peace and prosperity, using energy diplomacy to expand global influence while ensuring domestic energy abundance. "Energy dominance really is about energy abundance," Burgum stated. "We need ample energy to power next-generation AI innovation, support companies like Prologis and their important logistics customers. We need more affordable, reliable, around-the-clock energy than ever before."
1.2 Prologis's Energy Transformation
For Prologis, energy dominance and abundance mean deeply understanding client needs. While real estate costs represent just 3-5% of total supply chain expenses, Prologis maintains 5-10 year relationships with customers, allowing insight into their broader requirements.
"We found ourselves pulled into the energy business," Moghadam explained. "We have massive roof and ground space that can be converted to solar. We're doing this because solar is the most economical energy we can produce for our customers."
— Hamid Moghadam, Prologis CEO
1.4 Beyond Real Estate: Transitioning to Infrastructure
Moghadam views Prologis as evolving beyond real estate into infrastructure, with physical infrastructure now transitioning toward digital infrastructure. Data centers' enormous energy demands cannot be met solely through renewables.
II. The National Energy Abundance Committee
To accelerate energy transformation, the U.S. established the National Energy Abundance Committee, chaired by Burgum with Energy Secretary Chris Wright as vice chair. This committee aims to break down interagency barriers, helping companies like Prologis move faster.
2.1 Removing Government Roadblocks
Burgum compared the committee to a governor's economic development organization rather than a policy-making body. "We don't write reports—our mission is unleashing American energy to support the transformation Hamid described at Prologis," Burgum said. "Because he understands energy drives every aspect of his business and his customers' operations."
III. The AI Arms Race: Energy as Strategic Advantage
Burgum identified significant challenges in building horizontal infrastructure like pipelines and transmission lines, with many groups opposing such projects. Yet America needs this energy to compete in the AI race with China—a crucial objective he called an existential threat.
"We must consider locating AI factories—where intelligence is manufactured—near energy production sites to avoid years of permitting struggles for pipelines and transmission lines."
— Doug Burgum, U.S. Secretary of the Interior
IV. Prologis's Energy Strategy: Listening to Clients
When asked about client priorities, Moghadam was direct: they need abundant, affordable, reliable energy that won't constrain growth. He noted that while data centers currently face energy bottlenecks, advanced manufacturing will soon confront similar limitations.
V. The Future: Data Centers and Edge Computing
Moghadam revealed Prologis employs over 150 energy-focused staff across all operations. "The old mantra was 'location, location, location.' Now I'd say 'location, location,' with the third replaced by energy—that's what the world needs," he said.
He outlined a three-phase vision: first locating AI factories near existing power sources, then increasing on-site generation, and finally capitalizing on edge computing opportunities near population centers—where Prologis owns 6,000 potential data center conversion properties globally.
VI. Conclusion: Energy and AI Driving Logistics Real Estate
Prologis's transformation exemplifies logistics real estate's future—integrating energy solutions and technology to create intelligent, sustainable hubs. By embracing this evolution while maintaining focus on client needs, Prologis positions itself at the forefront of industry innovation.