The share price of the global logistics REIT (Real Estate Investment Trust) Prologis rose by 0.4% to $129.01, a $0.53 increase from the last close. The stock has gained about 21% this year as the prices have gone from $105 (as of January 2025) to $128.99 (as of December 31, 2025).
A part of the growth is mainly attributed to the three Fed rate cuts that came in September, October, and December. The small cuts brought down the interest rates from a targeted 4-4.25% in September to 3.50-3.75% in December according to Fed minutes. Although the cuts remain cuts and not big slashes, it’s an indicator of how the Fed will respond if the job market and growth remain weak in 2026.
How are Fed Cuts Affecting Prologis?
Prologis’ primary modus operandi (in expanding) involves borrowing money to develop projects such as warehouses, build-to-suit facilities, data centres, power-heavy sites, and other land site developments. Hence, a smaller interest rate puts the company at an advantage as it makes borrowing money cheaper. This effectively improves Prologis’ access to more resources- boosting their project volume.
When fed cut rates, REITs can become more attractive than bonds, hence Prologi would also benefit from the inflows owing to such a comparison from investors. Hence, fed cuts are not a rocket boost for Prologi, but it certainly increases the company’s valuation in the long run.
Why the Federal Reserve Made Three Rate Cuts in 2025
The Fed cuts are a strategic move to give a slight push to the cooling economy and dwindling job market. Moreover, the inflation has gone down significantly (inflation came 2.7% in December) and the GDP has shown a 4.3% growth in the third quarter, which gave the Fed enough room to cut rates without re-igniting inflation. The three small cuts instead of big slashes serve the same purpose, as they are meant to help the economy without sparking inflation.
The three cuts came after the FOMC (Federal Open Market Committee) met in September, October, and December. The following are the cuts and target ranges reckoned by the Federal Reserve:
- First Cut (September) – 4.25% – 4.50%
- Second Cut (October) – 3.75% – 4.00%
- Third Cut (December) – 3.50%- 3.75%
The cuts were not quite unanimous since the Fed minutes show strong divisions among policymakers, as the officials “expressed strongly differing views.” Formerly, many officials expressed aversion towards making more cuts after the second cut in October, as they believe that it’s “appropriate” not to change the rates for the rest of 2025. Yet, the rate cuts happened after the FOMC’s December meeting, indicating strong disagreements within the committee.
Such disagreements within the FOMC can make Fed’s next move more unpredictable. Yet, for now, enterprises that depend on loans for growth can seize the opportunity.
What to Watch Next?
The FOMC (Federal Open Market Committee) – the Fed’s rate-setting body has eight meetings scheduled in 2026. Its January meeting is likely to set the direction for how the policymakers will respond to slowing hiring, rising unemployment risk, and a cooling economy.
Global investment banks and research houses, including Morgan Stanley and Goldman Sachs, expect several 25 bps cuts through 2026, bringing the fed fund rate down to a 3.0-3.25% range. If these projections are realized, REITs like Prologis will benefit enough to push their stock prices higher.
