Management from logistics real estate investment trust Prologis Inc. (NYSE: PLD) on Monday raised the company’s 2021 rent growth forecast by 40 basis points to 10.3% in the U.S and by 300 bps to 8% globally.

Rents in the U.S. were up nearly 7% in the first half of the year, which was a record.

“There’s an ability to push through pricing today,” Hamid Moghadam, chairman and CEO, said on a call with analysts. “You have retail sales jump 20% from pre-pandemic levels and a supply chain that’s drying and there’s very little probability of losing that piece of business because people are flush with cash and out there spending money,” he explained.

Moghadam said he was concerned Prologis may not be pushing rents high enough and speculated that the lack of lost deals over rates supports his claim.

“The number is under 5%, which to me it means we may not be pushing rents enough. The fact that we’re not losing those deals to rents may not be such a great thing,” Moghadam added.

The San Francisco-based industrial warehouse operator reported core funds from operations (FFO) of $1.01 per share in the second quarter, which was 2 cents better than analysts’ expectations.

During the quarter, the company reported lease signings of 64 million square feet and engaged in lease proposals for 84 million square feet, both of which remained firmly above long-term averages.

Occupancy increased 30 bps year-over-year to 96% and was up 60 bps from the first quarter. At the close of the quarter, 97.2% of the portfolio had been leased.

Table: Prologis’ key performance indicators

Property vacancies stand at an all-time low as demand for goods remains strong and supply chains continue to struggle to get the merchandise needed to keep up with surging sales. Management’s expectation is that vacancy rates of approximately 4.5% will carry into 2022.

Management said demand remains highest for spaces with more than 100,000 square feet as e-commerce providers are flooding in and rapidly building out their networks. Through the first half of 2021, Prologis signed 168 e-commerce-related leases versus only 53 in the same period last year.

Nearly one out of every three deals inked is tied to e-commerce, but the company’s exposure to Amazon (NASDAQ: AMZN) has held steady at approximately 6% of total new leasing. Prologis’ e-commerce customer book is diversifying to include more providers as well as smaller players. The number of leases commenced with clients other than Amazon is three times higher this year.

Prologis raised its 2021 net earnings guidance by 9.1% at the midpoint of the new range of $3.08 to $3.14. Core FFO was raised by 1.8% to a range of $4.04 to $4.08 and ahead of the current consensus estimate of $4.01. Raised expectations around development stabilizations (+9.5%), development starts (+10.3%) and building acquisitions (+14.3%) now total $6.3 billion at the midpoint of their ranges.

“I think it’s going to continue for a while. Basically, everybody’s hair is on fire trying to keep up with demand,” Moghadam said.

Prologis Ventures is an investor in FreightWaves.

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