Despite having excess capacity, the demand for logistics real estate is still low.

The latest Industrial Business Indicator (IBI) report from Prologis reveals various challenges in the U.S. logistics market. The Q3 utilization rate is at 84.4%, below the normal range, indicating excess capacity and subdued demand despite solid GDP growth. Key insights include a 3% decline in average market rents, high vacancy rates nearing 6.8%, and a 20% drop in development starts compared to pre-pandemic levels. Prologis suggests that recovery to normal utilization levels may take two to four quarters if consumption remains steady and space returns stabilize.