
Bold Predictions for 2025: Supply Chain Trends to Watch
Supply Chain
Prologis Research tapped into decades of industry experience, proprietary data, and unique property and customer insights to predict seven supply chain trends for 2025.
In our 2024 predictions, we anticipated six out of seven key trends correctly, including a robust freight rebound, further slowdown in construction starts, outperformance in Latin America, continued investment in rooftop solar, a bounce in fundraising post-interest rate cuts, and the reversal of trends in global cap rates with expansion in Asia against compression in the U.S. and Europe. China stimulus, however, was delayed, and we did not see the recovery in domestic demand we expected, which will likely materialize later. (See more details about last year’s predictions at the end of this report.)
Bulk vacancy rates (>500 thousand square feet) will fall by 100 bps or more in the U.S. and Europe. Resumed expansion by large users who delayed decision-making in recent years, coupled with an approximately 65% year-over-year drop in new bulk deliveries, will produce a scarcity of large logistics buildings in many markets by year-end.
Air cargo volume surges by double-digits, fueled by growing international e-commerce beyond China and the U.S.
Brazil’s logistics real estate rent growth will surpass the global average by more than 500 bps as vacancy rates fall to never-before-seen mid-single digits.
Groundbreakings of logistics real estate buildings will decrease further in 2025, remaining 15% below normal globally.
A wave of M&A in the freight industry will drive technology investments and the next wave of expansion.
Import volumes for East Coast ports will bounce back after ratification of the International Longshoremen's Association (ILA) contract.
These seven predictions are based on insights from our unique global platform, and we’ll revisit them at year-end. Our outlook highlights 2025 as a year of renewed activity, laying the foundation for the continued evolution of global supply chains set against challenging supply-side economics for the built environment. As always, companies that stay ahead of what’s next are best positioned to capture new sources of growth.
✓ The global freight recession will reverse, demonstrated by double-digit growth in port and truck traffic.
✓ The great construction bust will intensify, with global starts hitting the lowest level since the 2008 financial crisis.
✓ Latin America rents will grow at more than double the global average, driven in part by nearshoring.
Latin America will end the year with mid-single digit rent growth while rents declined in a similar magnitude globally.
X Annual demand in China will reach the second-highest level on record, helping work through excess supply from the past few years.
Net absorption is expected to be moderate, approximately 60 million square feet in 2024, as sluggish economic activity and low consumer spending weighed on demand for Chinese logistics real estate.
✓ Technology, especially artificial intelligence, will drive up energy requirements in logistics facilities, incentivizing warehouse owners to double solar capacity.
Energy demand continued to rise as warehouses needed more power for EV fleets and the solar and battery requirements to run automation and daily operations.
✓ Interest rate declines will double private equity real estate funding in 2024. (We are taking a bull case on interest rate cuts.)
✓ Cap rate movements will reverse. U.S. and European cap rates will compress while expansion rotates to Asia.
Cap rates peaked in Q1 2024 at 5.5% in the U.S. and 4.8% in the UK and Europe combined. Both regions saw 10 bps decreases by year-end. Cap rates ticked up in China and Japan, despite divergent monetary policy.
i Nominal. CBRE, JLL, Cushman & Wakefield, Colliers, CoStar, fCBRE-EA, Prologis Research.
ii Xeneta.
iii Euromonitor, Prologis Research.
iv Bloomberg.
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Prologis’ Research department studies fundamental and investment trends and Prologis’ customers’ needs to assist in identifying opportunities and avoiding risk across four continents. The team contributes to investment decisions and long-term strategic initiatives, in addition to publishing white papers and other research reports. Prologis publishes research on the market dynamics impacting Prologis’ customers’ businesses, including global supply chain issues and developments in the logistics and real estate industries. Prologis’ dedicated research team works collaboratively with all company departments to help guide Prologis’ market entry, expansion, acquisition and development strategies.
Prologis, Inc. is the global leader in logistics real estate with a focus on high-barrier, high-growth markets. As of June 30, 2024, the company owned or had investments in, on a wholly owned basis or through co-investment ventures, properties and development projects expected to total approximately 1.2 billion square feet (111 million square meters) in 19 countries. Prologis leases modern logistics facilities to a diverse base of approximately 6,700 customers principally across two major categories: business-to-business and retail/online fulfillment.