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May 5, 2020

Warehouse giant seeing insatiable demand from Amazon, Walmart

An employee pulls a pallet jack carrying plastic crates past goods in storage units at the Amazon.com Inc. fulfillment center in Robbinsville, New Jersey, U.S., on Thursday, June 7, 2018. Seattle-based Amazon hasn't yet announced the exact date for this year's Amazon Prime Day, the e-commerce giant’s big July sales promotion. Photographer: Bess Adler/Bloomberg

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Prologis Inc., the largest owner of warehouses in the U.S., is getting a boost as social-distancing pushes consumers deeper into the embrace of e-commerce.

Companies including Amazon.com Inc. and Walmart Inc. have an “almost insatiable” appetite for more warehouse space, Chief Executive Officer Hamid Moghadam said in an interview on Tuesday.

“We’re not seeing those guys slow down, they continue to be very active in making new deals,” Moghadam said. “The strong continue to be taking a lot of space.”

Prologis and Blackstone Group Inc. have gobbled up warehouses in recent years, betting in part that more and more shopping will move online. Still, e-commerce is a relatively a small piece of the warehouse business, which is more tightly tethered to the overall economy.

Even as the pandemic fuels job losses and batters the economy, the surge in online shopping, including for groceries, is keeping vacancy rates low at Prologis properties.

The company has grown rapidly through acquisitions, but Moghadam doesn’t see buying many opportunities amid the current turmoil.

“I don’t expect anywhere near the kind of opportunities that came in other cycles,” he said. “I don’t expect fire sales.”

--With assistance from Noah Buhayar.