In a suite of predictions for 2024 business conditions, the logistics real estate firm Prologis has forecast that the global freight recession will reverse, demonstrated by double-digit growth in port and truck traffic, the firm said Monday.
In Prologis’ view, the Southern California region is likely to be among the first to benefit from that shift, as import volume at Los Angeles and Long Beach ports will exceed pre-pandemic levels. That will push Southern California logistics real estate demand to rank in the top 5 U.S. markets, reaching the highest level since 2021.
Already, the combined ports have seen a 46% resurgence in imports since their trough in February 2023, as temporary factors such as contract negotiations with dockworkers represented by the ILWU and the post- pandemic “bullwhip effect” faded as anticipated, Prologis said.
Overall, the firm delivered a sunny view of economic conditions in the coming year, saying “Our outlook highlights 2024 as a year of healthy demand growth, constrained supply, technological evolution of logistics facilities, and a turning of the capital markets cycle.”
In all, Prologis made seven broad business predictions for the coming year, including six more:
- 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.
- Annual demand in China will reach the second-highest level on record, helping work through excess supply from the past few years.
- Technology, especially artificial intelligence, will drive up energy requirements in logistics facilities, incentivizing warehouse owners to double solar capacity.
- Interest rate declines will double private equity real estate funding in 2024. (We’re taking a bull case on interest rate cuts.)
- Cap rate movements will reverse as interest rates decline. U.S. and European cap rates will compress while expansion rotates to Asia.
