Construction Costs to ‘Go Up Radically,' Prologis CEO Says
'Construction costs are going to go up radically,' Prologis CEO Hamid Moghadam said Wednesday on Bloomberg TV. 'We thought they were going to stabilize this year, but I think all of this immigration stuff is putting more pressure on construction.'
President Donald Trump has vowed to undertake the largest deportation campaign in American history, with US Immigration and Customs Enforcement detaining migrants at 60 new facilities this year, according to government figures analyzed by Bloomberg. The White House has given ICE a quota of 3,000 arrests a day.
'It is a real issue for our customers, because they need people to work in their warehouses, and often those are the same people that are having immigration issues,' Moghadam said Wednesday. 'So they're being forced into more automation, which is not necessarily economic at this point in time.'
Moghadam added that he doesn't 'know where the employees are going to come from that are going to do all this manufacturing that we are talking about.'
For his part, the CEO said the labor shortage makes Prologis' buildings more valuable because it will cost more to replace them.
Shares of the San Francisco-based firm rose 1.4% Wednesday after it reported second-quarter results that were 'better than initially feared' after tariffs came into focus, according to Evercore ISI's Steve Sakwa.
Prologis' funds from operations — a measure of a cash generated by a REIT — exceeded analysts' expectations, and its occupancy rates remained stable at about 95%.
--With assistance from Romaine Bostick and Scarlet Fu.
More stories like this are available on bloomberg.com
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