It’s interesting to think back to 2021 when Prologis (PLD) was viewed as a major player in the e-commerce realm. I vividly remember trading stocks during that time, as retailers, especially Amazon, were scrambling for warehouse space. Prologis was well-positioned with its locations and established connections. But now, they’re branching out—pretty aggressively—into data centers, renovating existing warehouses and developing new ones. They’ve laid out plans to boost data center capacity by up to 10 gigawatts in the next decade. With suppliers shifting their distribution closer to these data centers, Prologis is increasingly engaging with companies involved in this construction across the U.S. Interestingly, this industrial REIT is quietly transforming into a digital infrastructure player, yet many still see it as just an “e-commerce warehouse.”
Researching stocks in unexpected sectors can be enlightening. It encourages you to rethink why certain names, like Prologis—which many associate with the pandemic period of e-commerce—are among the top performers. Things are shifting. Sean will explain how Prologis, alongside another name like Simon Property Group (SPG), is thriving this year, even as rising interest rates raise eyebrows. Usually, higher rates spell trouble for real estate, but Friday’s market response was unusual. Rates went up due to surprisingly good labor data, and real estate stocks appreciated, signaling confidence.
Speaking of Prologis, I’ve written about them before. They are certainly the biggest player in the industrial REIT space, managing roughly 758 million square feet of logistics and distribution properties. While rising interest rates hit PLD’s performance hard in previous years, the company is up 14% year-to-date in 2026, with a 3% dividend yield. Their Q1 2026 was robust, showcasing $2.3 billion in total revenue and a significant increase in net income. They even signed a record-setting lease covering 64 million square feet and launched a substantial $2.1 billion in new developments, notably in data centers.
Now, onto SPG. It’s quite different from Prologis. As the largest retail REIT in the U.S., Simon operates 212 domestic and 42 international properties. Its scale and quality of real estate establish a strong protective barrier against competitors, with no single tenant contributing more than 5% to their revenue. The company performed well in the first quarter of 2026, posting a 7.5% increase in real estate FFO. Mall occupancy hit 96%, and beliefs about its health might shift, especially since the stock has been on a remarkable upward trajectory, surpassing pandemic lows. The stock was resilient, rebounding nicely from challenges and even hitting an all-time high recently.
In summary, even as markets fluctuate, both Prologis and Simon Property Group are worth watching. Each offers a unique perspective on how the real estate sector is evolving, particularly in the current climate. Investors likely need to stay cautious but also open to the potential these companies hold as they adapt to new realities. It’s certainly a time for careful consideration and perhaps a reassessment of what we think we know.
