Imagine a future where e-commerce packages no longer ship from traditional warehouses, but from highly intelligent "AI factories" powered by continuous clean energy. While this might sound like science fiction, Prologis, the world's largest logistics real estate company, is actively working to make this vision a reality.
At Prologis' recent annual Groundbreakers event, Chairman and CEO Hamid Moghadam engaged in a thought-provoking discussion with U.S. Secretary of the Interior Doug Burgum. Their conversation explored the intricate connections between supply chains, artificial intelligence, and energy, revealing the company's ambitious plans in the energy sector. This dialogue wasn't merely an industry exchange—it served as a preview of future economic, technological, and energy strategies.
Energy: The New Battleground for Logistics Real Estate
For decades, superior location—strategic warehouse placement near transportation hubs and consumer markets—defined competitive advantage in logistics real estate. However, the industry landscape is shifting, with energy emerging as a critical new factor. This transformation extends beyond operational cost reduction to fundamental questions about future business strategy.
Moghadam astutely observed that while real estate costs represent just 3%-5% of total supply chain expenses, Prologis' long-term client relationships provide deep insight into customer needs—particularly regarding energy. Clients require reliable power for warehouse operations (lighting, climate control, automation) and transportation infrastructure (electric trucks, charging stations).
Recognizing these needs, Prologis has entered the energy sector, transforming warehouse rooftops into solar farms to provide cost-effective clean energy. This initiative represents more than value-added service—it's a strategic pivot. By offering sustainable energy solutions, Prologis reduces client costs while supporting environmental goals, thereby strengthening business partnerships.
Beyond Real Estate: Prologis' Infrastructure Transformation
Prologis' ambitions reach further. Moghadam emphasized the company's evolution beyond traditional real estate into broader infrastructure—particularly digital infrastructure like data centers. These facilities, the backbone of cloud computing and AI, consume enormous energy amounts that renewable sources alone cannot satisfy.
Prologis' energy strategy therefore adopts an "all-of-the-above" approach, pursuing every potential solution—from advanced manufacturing to truck electrification—to ensure reliable supply. This expansion redefines Prologis as a comprehensive infrastructure provider offering integrated solutions spanning storage, transportation, energy, and data services.
U.S. Energy Strategy: From "Energy Dominance" to "Energy Abundance"
Secretary Burgum outlined the administration's energy vision at the event, stressing the need for "energy abundance" to power next-generation innovations like AI. He noted the creation of the National Energy Abundance Committee to streamline approvals, attract investment, and secure private sector electricity access—prioritizing economic growth and national security.
Burgum advocated pragmatism over ideology in energy production, calling for increased supply of all reliable, affordable energy forms. While supporting renewables like solar (including Prologis' rooftop installations), he cautioned against over-reliance on intermittent sources that strain grid stability. Distributed energy models that produce power near consumption points received particular emphasis for their efficiency and security benefits.
The AI Arms Race: Energy as Decisive Factor
Burgum framed energy as the critical determinant in the U.S.-China AI competition, urging strategic placement of "AI factories" near energy sources to avoid transmission infrastructure delays. This highlights energy's role in computational capacity—where ample, reliable power directly impacts AI development speed and competitiveness.
He likened transmission lines to horizontal infrastructure, noting U.S. challenges in permitting and construction. Proximity between AI facilities and power generation, Burgum argued, offers a more efficient solution than lengthy transmission projects.
Client Needs: Ample, Affordable, Reliable Energy
When asked about client energy requirements, Moghadam stated plainly: businesses need abundant, economical, dependable power without growth constraints. He identified energy as the limiting factor for data centers and, increasingly, advanced manufacturing—urging preemptive solutions before demand surges.
Moghadam called for ending the renewables-versus-traditional energy dichotomy, advocating a diversified portfolio. He proposed colocating AI facilities with generation sites to optimize electron and data transmission—an innovative approach minimizing grid dependence while boosting efficiency.
Prologis' Energy Deployment: From Rooftop Solar to Data Centers
With over 150 employees dedicated to energy initiatives, Prologis treats power as strategic asset rather than mere operational cost. Moghadam positioned energy as equally vital to logistics real estate as location—a paradigm shift for the industry.
He outlined a three-phase AI infrastructure strategy: initial concentration near existing power supplies, followed by local generation expansion, and ultimately decentralized processing near population centers to reduce latency. Prologis' global portfolio of 6,000 urban properties presents conversion opportunities into distributed data centers—a potentially transformative advantage.
While AI-driven grid optimization can temporarily enhance capacity, Moghadam acknowledged that lasting solutions require expanded generation and local infrastructure—underscoring energy's ongoing centrality to technological progress.
Conclusion: Energy Defines Logistics Real Estate's Future
The Prologis-Interior Secretary dialogue reveals a sector undergoing profound change—where energy transitions from cost center to strategic asset driving growth. Prologis' solar-to-data-center initiatives position it at this transformation's forefront, with implications extending beyond corporate strategy to national competitiveness.
This evolution challenges traditional logistics real estate models, demanding innovation where energy becomes the new differentiator. Simultaneously, it reinforces energy security's importance to national prosperity—requiring policy frameworks that balance reliability, affordability, and sustainability.
Prologis' vision reflects broader trends toward integrated, sustainable infrastructure. As energy assumes geopolitical significance in the AI era, such forward-looking strategies may well determine which economies lead tomorrow's digital landscape.