Rent Growth Outlook
Q: What are your rent growth expectations going forward?
A: We anticipate that effective rents will be modestly negative over the next 12 months, particularly influenced by Southern California, with overall rent declines ranging from 2% to 5% before inflecting upwards. Despite recent quarters of negative market rent growth, we've achieved significant rent change and NOI growth, with a 74% increase, one of our highest quarters.

Occupancy Trends and Guidance
Q: Can you discuss occupancy trends and future guidance?
A: Our year-to-date average occupancy is around 96.6%, and while we anticipate some challenges due to tougher lease renewals and longer lease-up times, we feel confident in maintaining occupancy within our guided range. We expect retention rates to average around 75% in the coming quarters.

Demand Trends and Outlook
Q: How are demand trends across different sizes and geographies?
A: Demand remains strong, especially in the Southeastern U.S., Latin America, and Europe. Larger spaces above 100,000 square feet, particularly over 250,000 and 500,000 square feet, are seeing the strongest demand momentum. Demand below 100,000 square feet is stable, with vacancies especially low.

Southern California Market Impact
Q: How is the Southern California market affecting your performance?
A: Southern California is a unique case with both an expansion in concessions and a reduction in base rent. It accounts for about 23% of our rents over the next 12 months. Despite projected declines, it offers significant mark-to-market opportunities, providing downside protection on expiring rents. The impact is expected to stabilize over the next 12 months.

Transaction Market Activity
Q: What are you seeing in terms of transaction market activity?
A: The transaction market has normalized with increased activity. We've outperformed in dispositions, prompting us to raise our guidance. The market is strong with multiple offers on portfolios, especially in the $100 million to $200 million range. This opens up exciting acquisition opportunities for us globally.

Development Pipeline and Margins
Q: Can you update us on your development pipeline and margins?
A: Our development portfolio, valued at $6 billion and comprising 35 million square feet, is trending towards our long-term margin of 24% to 25%. Despite some slowdown in development leasing, we feel very good about our portfolio, matching our 20-year average margins in the high 20% range.

Impact of Tariffs on Industrial Real Estate
Q: How might tariffs impact industrial real estate and your strategy?
A: While tariffs could lead to higher inflation and potential economic headwinds, we're not overly concerned about the direct effects. Our focus on the consumption side of the supply chain means that goods will still need to be consumed in the U.S., regardless of their origin. We don't foresee a radical demand shift affecting our business.

Data Center Business Outlook
Q: What's the outlook for your data center business?
A: We're more optimistic about our data center business since our Investor Day. We've strengthened our team with specialists and have excellent utility relationships through our renewable energy team. Our strong balance sheet positions us well to meet the critical needs of hyperscalers, enhancing our competitive position in this market.

3PLs Resetting Footprints
Q: Where are third-party logistics providers in resetting their footprints?
A: The 3PL market currently has slack, especially in Southern California where there's a higher concentration of 3PLs. This excess space is scattered, but demand persists for large requirements. The market comprises both baseload business and a more volatile surge component, with SoCal experiencing more of the latter.

Retention Rates and Free Rent Concessions
Q: How are retention rates and free rent concessions trending?
A: We expect retention rates to remain around 75%, aligning with historical averages. Free rent concessions are reverting to normal levels after experiencing unusually low free rent during surge periods. As the market normalizes, concessions are adjusting accordingly across different regions.