Leasing Demand and Sustainability
Q: How sustainable is the improvement in leasing demand?
A: Leasing activity has improved, with more inquiries and RFPs, but decision-making remains deliberate. Indicators point in the right direction, but it's too early to draw long-term conclusions. The national pipeline decreased to about 289 million square feet from over 600 million, suggesting potential for net absorption to improve.

Impact of Recent Leasing on FFO
Q: How will recent leasing impact 2024 and 2025 FFO?
A: Many leases signed have second or third quarter start dates, so the FFO impact will be greater in 2025. Roughly, there will be a doubling of FFO impact from these leases in 2025 compared to 2024.

Development Yield Targets
Q: What yields are needed for new development projects to make sense?
A: We aim for at least a 6% yield on developments and an 8% to 8.5% IRR, depending on location, size, and growth prospects. As total return investors, we can accept lower yields where growth is higher.

Occupancy Upside from Developments
Q: Is the 200 basis point occupancy opportunity inclusive of announced leases?
A: The 200 basis point opportunity is in addition to announced leases. It represents 1.2 million square feet of development leasing assumed to occur in the fourth quarter, which will significantly impact occupancy upon lease-up.

Southern California Market Trends
Q: What trends are you seeing in the Southern California market?
A: Q2 was more robust than Q1, with increased transactions. Active size ranges are over 400,000 sq ft and under 100,000 sq ft, while 150,000 to 400,000 sq ft is less active due to supply. L.A. vacancy is up to 4%, limiting tenant choices compared to Inland Empire East and West. High renewal rates indicate tenants prefer to stay put.

Dispositions and Capital Allocation
Q: Are there more opportunities for dispositions, or is volume decreasing?
A: We have plenty of funding and will continue to dispose of assets where growth opportunities are limited to redeploy capital. However, the volume of sales is likely to be lower going forward.

Market Rent Growth and Releasing Spreads
Q: When will cash releasing spreads decrease from 40–50% to normal levels?
A: The mark-to-market resilience is good and has duration. As long as rents remain flattish, the mark holds. Cash releasing spreads will come down each year since rent growth isn't as strong as in 2021 and 2022.

Federal Mogul Lease Expiration
Q: What's the status of the Federal Mogul lease expiring in 2025?
A: The 708,000 sq ft building in Central PA has a lease expiring at the end of March 2025. The tenant is vacating, and we're marketing the building now. Preliminary interest has been seen, with a mark-to-market of approximately 40% to 50%.

Future Development Starts
Q: Will there be additional development starts in the second half?
A: Improvement in Q2 is encouraging, but we need sustained momentum. We've leased 2.6 million sq ft out of 4.7 million sq ft of developments—56%. If this tempo sustains, we'll engage in new starts in areas like South Florida, Nashville, and Northwest Dallas.

Impact of Tariffs and Political Landscape
Q: How might tariffs and the political landscape affect your business?
A: Tariffs are a concern as they create inflation but currently target products like semiconductors and EVs, which don't impact our warehouses. We don't have manufacturing tenants. Nearshoring to Mexico could be a tailwind for us in markets like Dallas and Houston.