Shares of industrial-focused real estate investment trusts (REITs) have tumbled more than 25% this year. The main issue is concern that the economy is slowing down, which could cool off demand for warehouse space.
However, the industry isn't seeing any signs of a slowdown in demand. That's evident from the recent numbers reported by some leading industrial REITs . They show that these companies are starting to run out of space, suggesting that rental rates could continue their scorching rise.
Leading global industrial REIT Prologis (NYSE: PLD) recently reported its second-quarter earnings, which were exceptionally strong. The company signed 51.3 million square feet of leases during the period -- 43.6 million square feet from its operating portfolio and 7.7 million square feet in its development portfolio -- with rental rates on the same space surging 45.6%, led by 54% rent growth in the U.S. As a result, Prologis ended the period with a 97.6% occupancy rate, while its same-store net operating income (NOI) grew by 8.2%.
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What Economic Slowdown? These REITs Are Running Out of Space