The fundamentals of real estate still hold up, even when there is an elephant in your warehouse. Supply and demand are favoring the U.S. industrial space, despite fears of China's slowing economy sucking the wind out of the sector's sails.
Prologis, the largest warehouse REIT in the nation, reported strong fourth-quarter funds from operations on Tuesday, beating expectations by 2 cents per share. Revenue of $643.2 million was considerably higher than expected, up 43 percent from one year ago.
"The dynamics of the business are very positive," said Prologis CEO Hamid Moghadam. "Rental growth is by far the biggest driver, because we've driven occupancy as far as we can. There is a lot of room to run on the rent side, and the reason for that is very constrained supply. The development machine has not kicked in."