With Warehouse Vacancy Rates Rising, Will This Be a Problem for Prologis?
As the U.S. enters 2023, fears of a recession are building after the Federal Reserve aggressively hiked the federal funds rate to get inflation under control. The Fed's tightening cycle was one of the most aggressive in history, and aggressive cycles usually trigger recessions. In a recession, consumer spending generally falls, which is bad for the retail sector. It also will hurt sectors that support retail, especially the logistics industry. It looks like activity is falling in the logistics market, which could be a red flag for Prologis (NYSE: PLD).
Image source: Getty Images.
Prologis is an industrial real estate investment trust (REIT) that specializes in warehousing and distribution. If you drive down a major U.S. interstate, you will probably see these huge facilities with dozens of truck bays. These are the typical facilities that Prologis operates. These logistics spaces are mainly used for inventory management. A big-box store will keep a certain amount of inventory in-house and then access the logistics facility when it needs more.
Source Fool.com
