Hamid Moghadam: Yeah. We are watching everything really carefully. I mean I am not — believe me, we have been through enough cycles and enough where things can happen that none of us predict that we want to be vigilant. That’s why we are starting out the year with very conservative assumptions and things that we can deliver. I mean, I think even on this basis, we are going to, I think, put up unbelievably good numbers. I mean, who can think of almost a digit kind of returns or growth off of such strong growth, 14% per year earnings growth consistently for the last three years. So I think the arrow is up. But, yeah, I mean nobody predicted Putin going into Europe last year. It’s usually the stuff that you don’t — you can’t predict.
I mean, am I worried about inflation really thanking our numbers? No. Am I really worried about recession thanking our numbers? No. Am I worried about e-commerce going out the window and people going back to shopping deals the way without that percentage going up? No, I am not worried about those things. But I am worried about things that I don’t even know what to worry about. You get my drip there, anyway. So, yeah, there’s always bad stuff that can happen that are out of the realm of normal projections.
Operator: Our next question comes from Mike Mueller with JPMorgan. Please state your question.
Mike Mueller: Yeah. Hi. What are the anticipated yields for your 2023 development starts?
Dan Letter: Anticipated — this is Dan. The anticipated yields are actually up slightly, but still in the low 6s, 6.1-ish, 6.2-ish.
Operator: Thank you. Our next question comes from Anthony Powell with Barclays. Please state your question.
Anthony Powell: Hi. Good morning. Question on utilization, which increased in the quarter, what drove that growth given all the headlines we see about port volumes were not declining and how big of a driver of the higher utilization is for your outlook for this year given the strong outlook this year?
Hamid Moghadam: Yeah. I don’t think utilization actually moved that much. I mean the peak utilization ever all time was 87%. And I think that 1 point is well within the sampling bias that can take place, because it’s not a perfect data set. It’s a sample of large data sets. So I don’t think there’s a meaningful trend in certainly not a decelerating trend in utilization. With respect to port volumes, I think, port volumes are pretty meaningless in the last — really since COVID started, because there were so many fits and starts and play things being in the wrong place and all that. And yeah, the West Coast ports have lower volumes today than they did before, but the East Coast and golf ports are getting a lot more volume than they did before.
So on an aggregate basis, port volumes are just fine and if you look at the lag that it takes too many empty containers on one side of the ocean, and factories shutting down on the other side of the ocean and all that. I think until the market normalizes, you can’t really draw any conclusions from port volumes. So I don’t see either one of those two trends affecting demand. Chris, do you want to?
Chris Caton: Yeah. I will just build on that by saying two things are also happening. One is market vacancies in the U.S. are 3.2%, 3.3% lower in Europe. That, in its own right creates some pent-up demand and so there’s a need to push utilization within the facilities. And then second, look, inventories are up 15% on a year-on-year basis — on a nominal basis and 9%, 10% on a real basis. So there is real structural demand, lifting new demand, as well as in-place customers.
Hamid Moghadam: Yeah. Notwithstanding that increase in real inventories, we still think we are less than halfway towards equilibrium level of inventories about 45% of the way there. So we think there’s a lot of tailwind behind inventories, too.
