Camille Bonnel: Hi. Good morning. Your outlook for development stabilizations is quite positive despite the supply environment remaining elevated for the first half of this year. So could you just expand on what the expected timing is around for this? And then, if you can just follow up a little bit more on your comments around tenant inventory. What are they telling you in terms of how they plan to adapt to any persisting disruption around East Coast ports? Thank you.
Dan Letter: Camille, this is Dan. I’ll start with your question on stabilization. It is a big year on stabilizations for us. We actually started the year out with some good news. Late December, we actually pulled in for stabilizations that we had expected to happen in the first quarter of 2024. But overall, the timing of those stabilizations, it’s spread out pretty well throughout the year. And one number I would just point to is, that 2024 stabilization volume is 46% leased already, which is actually 300 basis points, 400 basis points above the average at this point over the last several years.
Chris Caton: Hey, Camille. It’s Chris. I want to jump in on the disruption of the ports. We are really just now seeing the diversions, as it relates to disruptions in both Panama and the Red Sea and Suez. And so, it’s a bit early for us to see real medium term leasing decisions in response to these disruptions. But number one is the clarification or the ratification of the labor agreement on the West Coast is providing a clear landscape for decision making and engines of growth are beginning to kick in in Southern California.
Dan Letter: Let me make that point a little stronger. I think all this concern about LA is over, and it hasn’t shown up in the numbers yet, but it will in the next six months. So, I don’t think we’ll be sitting here on calls like this worrying about LA and its absorption. Now, will we worry about something else? I’m sure we will. I don’t know whether that’s going to be the East Coast or Houston or whatever. But yeah, I mean, you’ve seen two big movements. It’s not just Suez, it’s also Panama Canal and the water issues there. And the expense of shipping stuff through the canal is leading to more reversion back to the normal way of doing it, which is getting it to LA and then land, bridging it over, but there could be other disruptions.
It could be something can blow up in the Persian Gulf. So it’s very hard to predict those things. The big message is this, we can spend a lot of time guessing as to what the share of West Coast is, East Coast is, all of that. The point is, people thought COVID was the big unknown factor. And now that COVID is over, the world is going to go back to a stable, predictable, just in time type of inventory strategy. I think each one of these things, whether it’s Panama, whether it’s Suez, whether it’s — or in the Middle East, whether it’s something in the Persian Gulf, will remind people that they generally need to have a more conservative inventory strategy. And that’s the big long term driver which is going to be a tailwind for demand that we haven’t really seen play out just yet.
We’re pretty confident that will.
Operator: And our next question comes from the line of Mike Mueller with J.P. Morgan. Please proceed with your question.
Michael Mueller: Yeah. Hi. Do your comments about seeing revived customer interest apply to big-box leasing as well?
Tim Arndt: Yeah. In fact, I would say, some of the largest customers that we talk to, are to — use an overused word. There are definitely some green shoots. Their posture is changing from that of let’s hold off. And they’ve held off as long as they can because they’re building out their networks, particularly on the e-com side. And I think given that the economy hasn’t tanked like everybody thought it would a year and a half ago, I think they’re tiptoeing out there, and with the first couple of doing it, I think the rest will follow. So, I think, yeah, the big-box guys are coming out of the shadows and taking up some space again.
Operator: And our next question comes from the line of John Kim with BMO Capital Markets. Please proceed with your question.
John Kim: Thank you. On your commentary on Southern California coming — rents coming down 7%. Can you give the same color on New York, New Jersey? That’s a market you’ve seen a larger decline sequentially in occupancy, and not you’re discussing issues with port volumes and the canals.
Tim Arndt: We are not going to get into quarterly rent forecast and we’re not going to get into market-by-market forecast. We run a 1.2 billion square foot business. And I think we already, in terms of a company of our size and disclosure and details, are definitely in the 99th percentile. And we just don’t have that ability. So we’re not going to put some numbers out there that we can’t be certain of. So, if you don’t mind just let’s stay away from that fine level of dissection beyond our ability.
Operator: And the next question comes from the line of Nick Thillman with Baird. Please proceed with your question.
Nicholas Thillman: You guys touched on a little bit on the [Technical Difficulty]. At your Investor Forum, you kind of mentioned that you expected ex-U.S. to outperform U.S. in a market rent growth standpoint. It’s still — is that still the case? And then maybe could you just highlight some markets that you’re a little bit more incrementally positive on over the last 30 days of activity? Thanks.
