Prologis Leased More Space Than Ever Last Year While Ramping Up Data Center Growth

The world’s largest industrial landlord accelerated its data center expansion throughout 2025 while also closing a record annual amount of tenant leasing.

San Francisco-based Prologis finished with 43.8 million square feet of leases in the fourth quarter to hit a record 228 million square feet of new tenant deals for the year, according to new firm figures for the last three months of 2025.

The real estate investment trust also expanded its data center power capacity to 5.7 gigawatts, and now controls roughly 14,000 acres of land for data center and energy-related development.

“Advantage today is defined by location, power and scale,” CEO Daniel Letter said Wednesday during the company’s fourth quarter earnings call. “With the growing power pipeline, deep customer relationships and multidisciplinary expertise, we are well-equipped to develop critical infrastructure few can match.”

Prologis also said that it is in negotiations with large investors regarding a potential data center fund.

“Capital isn’t necessarily the constraint here, and what we’re really after is determining what capital structure makes sense for this business that allows us to take full advantage of all the development opportunities in the portfolio,” Tim Arndt, Prologis’ chief financial officer, added.

In the fourth quarter, Prologis closed $1.89 billion in dispositions to hit $4.4 billion in property sales for the year. The company also completed $517 million in acquisitions during the period for approximately $1.15 billion for the year.

In 2026, the REIT estimates it will make another $1 billion to $1.5 billion in acquisitions, and up to $2.25 billion in dispositions.

On the development front, the firm started more than $1 billion in new projects during the final quarter of 2025. Moving into 2026, Prologis expects to start $4 billion to $5 billion in new development projects — 40 percent of which are expected to be data centers in response to “exceptional” leasing demand.

Prologis reported a moderate year-over-year dip for its quarterly funds from operations (FFO). Core FFO per diluted share was $1.44 in the fourth quarter of 2025, compared with $1.50 during the same period the year before, and $1.49 in the third quarter. On a full-year basis, however, core FFO grew to $5.81 per share in 2025, up from $5.56 the year prior.

The industrial owner saw a slight increase in total revenue for the fourth quarter at $2.25 billion, up from the $2.2 billion recorded in the same period in 2024, and essentially flat compared to the third quarter of 2025. For the full year, the company generated $8.79 billion in revenue, up from $8.2 billion in 2024.

Net income for the quarter reached $1.4 billion, up far more than the $762.9 million reported in the previous quarter and from the $1.28 billion reported in the fourth quarter of 2024.

Prologis leaders also noted a “tone shift” in the nation’s biggest industrial market, Southern California.

“There is a new direction in customer demand, and it’s giving us confidence in the call that we’ve been consistent in making in terms of the opportunity for cyclic recovery to emerge,” managing director Chris Caton said. “Inland Empire is clearly outperforming Los Angeles. There’s great improving net absorption in that geography. Class A over Class B is outperforming.”

Arndt added that improved customer sentiment and “better-than-expected” market conditions reinforce Prologis’ view that industrial vacancy has peaked in Southern California, and rents are beginning to improve. Further, the firm expects the vacancy rate across its portfolio to decline from 7.4 percent at year-end 2025 to 7.1–7.2 percent by year-end 2026.

Wednesday also marked the first earnings call without longtime CEO Hamid Moghadam, and with Letter, who takes the helm this month, in his place. Letter is now the head of 1.3 billion square feet across 20 countries (with the U.S. accounting for roughly 85 percent of NOI).

“Logistics is and will remain the foundation here, serving the consumption centers around the world, capturing the embedded rent growth and lifting rents as markets recover,” Letter said.

Gregory Cornfield can be reached at gcornfield@commercialobserver.com.