Companies are rethinking where they place warehouses as demand for faster deliveries and reliable energy grows, according to Prologis CEO Dan Letter. While large centralized facilities remain necessary, businesses are increasingly looking to build more decentralized fulfillment networks closer to consumers.
In a survey conducted by Prologis with the Harris Poll, 91% of business leaders said retailers and logistics providers urgently need more decentralized networks to meet delivery expectations. The survey drew responses from more than 1,800 leaders in the United States, the United Kingdom, Germany, India, China and Mexico.
The share of companies planning to retain their existing global footprint fell 14 percentage points from the previous year to 36%, the survey found. Faster delivery was the leading reason for changing locations as consumer expectations rise. Same-day delivery has doubled in prevalence since 2019, and respondents ranked speed above price as a competitive advantage. More than half said their companies were both diversifying and regionalizing their operations, while about a third were nearshoring and reshoring.
Letter said Prologis focuses on properties in major consumption and population centers, including specific submarkets where businesses can get closer to customers. He added that the company has sold more than 200 million square feet of property over the past 15 years after hearing that those locations did not fit customers’ long-term plans. Prologis’ portfolio totals 1.3 billion square feet, he said.
Energy infrastructure is also shaping location decisions. Survey respondents ranked power reliability as the top factor in choosing logistics locations, with energy resilience a growing concern in part because of artificial intelligence. Just over a quarter of executives expect industrial landlords and developers to lead or fund on-site resilience projects, such as solar power, energy storage and fleet charging.
Letter said Prologis expanded its energy work about five years ago and now generates more than 1.4 gigawatts through its solar and storage business. The company is also working with customers on electrifying their fleets.
The survey also pointed to AI as a growing influence on supply chains. Respondents identified demand forecasting and Agentic AI systems as among the technologies likely to have the greatest impact over the next three years. Three-quarters said they plan major investments in AI for demand forecasting and inventory replenishment. Letter said Prologis is investing alongside customers to understand how their needs are changing.
Sources: CNBC Markets.