ProLogis Releases New Research Reports on Industrial Property Markets and U.S. Construction Pipeline
- Vacancy Rate Across Top 30 Markets Falls to 8.3 Percent at Year End - - New Warehouse Development Increasing But Remains Restrained -
ProLogis (NYSE: PLD), a leading global provider of distribution facilities and services, today released two semi-annual research reports on the state of the U.S. industrial property market.

The first, the company's U.S. Property Market Review, indicates that the market for industrial distribution space continues to improve across the United States.

 The average vacancy rate for the country's top 30 markets fell to 8.3 percent in the second half of 2005, compared to 9.7 percent a year earlier. Meanwhile, "asking rents" jumped 5 percent, and broader-based market rent increases are likely to occur in 2006 as the supply-demand balance continues to tighten.

The second report, entitled U.S. Construction Pipeline Report, shows that new industrial development appears to be restrained despite those exceptionally good economic conditions. While the pace of development starts increased in the second half of 2005, deliveries of new product are nonetheless expected to total 120 million to 130 million square feet in 2006, or 2 1/2 percent of existing inventory. That's low compared to prior periods of sustained economic recovery.

"Many observers are wondering whether developers may have exchanged their former restraint for unbridled exuberance," said Leonard Sahling, ProLogis first vice president of research. "We don't think so. Far from having a free rein, commercial property developers today are constrained by numerous internal and external checks and balances -- enough to maintain a tight leash on new construction." Sahling noted that those checks include greater market transparency, more stringent regulations governing commercial lending, and increased concentration of real estate ownership in the hands of publicly traded companies.

The two reports are based on market data compiled from a variety of sources, including ProLogis market officers, brokerage companies and data vendors. The information they contain covers the last six months of 2005 and the top 30 distribution markets across the U.S.

Detailed findings in the reports include the following:

      --  23 of the top 30 markets in the U.S. posted vacancy-rate declines in
          the second half of 2005;

      --  Eleven of the top 30 markets have staged a full recovery.  They are:
          Indianapolis; Las Vegas; Los Angeles; Orlando; Phoenix; Portland,
          OR; Reno; Seattle; Tampa; south Florida; and Washington, D.C.

      --  Columbus, OH, continues to be characterized as a "laggard" market
          due to the significant deterioration in conditions the city
          experienced in 2004 and the first half of 2005.  However, Columbus
          saw a 2.6 percent decline in industrial vacancies during the latter
          half of the year, indicating it may now be rebounding.

      --  Net absorption totaled a remarkable 167 million square feet during
          2005, compared to 114 million square feet in the prior year.  That's
          the equivalent of a 3.7 percent increase in occupied space.

      --  Speculative building accounted for 76 percent of total starts in
          2005, compared with 66 percent in 2004 and 59 percent in 2003.

"There continues to be a real shortage of high-quality market statistics in the industrial sector," Sahling said. "As such, ProLogis is pleased to present these new reports, which provide valuable insights into the status of individual cities as well as a macro view of conditions at the national level."

For a copy of the new reports or past reports, visit the "Proprietary Research" page of the ProLogis web site, at www.prologis.com .