Logistics real estate investment trust Prologis announced that it is sticking with its initial 2025 outlook even as uncertainty around trade policy has some customers delaying leasing decisions. The company said favorable trends in the first quarter had it in position to raise guidance but “Liberation Day” tariffs announced April 2 forced it to pause that decision.

Looking forward, management told analysts on a Wednesday conference call that there are still many unknowns around near-term leasing demand but that longer-term fundamentals and the need for incremental warehousing space remain intact.

“Let’s be clear: The range of outcomes is wide. We see potential for a recession, inflation or possibly both. And let’s also not dismiss the potential for a quick resolution,” CFO Tim Arndt said on the call.

He said the company was “designed to weather any environment,” noting a diverse customer portfolio, built-in rent escalators and a strong balance sheet, but that “customers simply lack a steady backdrop upon which to plan their businesses.”

Prologis (NYSE: PLD) reported first-quarter core funds from operations (FFO) of $1.42 per share before the market opened on Wednesday, which was 4 cents above consensus and 14 cents higher year over year.

Total revenue was up 9% y/y to $2.14 billion as new leases commenced increased 35% to 65.1 million square feet, but occupancy slid 190 basis points to 94.9%. (Occupancy ended the period at 95.2%.)

Arndt said many customers have been pulling forward inventories ahead of tariffs and some are now looking for more storage space. Port markets could also see a near-term lift given a 90-day pause on some tariffs as customers continue to build stockpiles.

Deals are still getting done currently but at a reduced pace. Overall leasing activity for Prologis was down 20% over the past two weeks. It signed 80 leases covering 6 million square feet in that period. However, the company believes the need for space will increase in a “disconnected world” as many players will be required to stand up new supply chains.

Prologis maintained its full-year 2025 guidance for core FFO to range from $5.65 to $5.81. The outlook continues to assume average occupancy in a range of 94.5% to 95.5%. It did lower its forecast for development starts by 30% at the midpoint of the new range of $1.5 billion to $2 billion until visibility improves.

The bottom end of the FFO guidance range contemplated worst-case scenarios from past downturns like the Great Financial Crisis when rents fell 18% and vacancies declined 170 bps.

“But please, this is not a prediction. We are incapable of making a prediction in this environment,” said Hamid Moghadam, Prologis co-founder and CEO.

The concern over tariffs had little impact on the quarter as global rents fell 1.5% and were down just 0.5% excluding Southern California.

Shares of PLD were 2% higher at 2:42 p.m. EDT on Wednesday compared to the S&P 500, which was down 2.6%.

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