Hamid Moghadam
Hamid Moghadam is an Iranian-American businessman who is chairman and chief executive officer of Prologis, the largest owner and developer of logistics real estate in the world. He co-founded its predecessor, AMB Property Corporation, in 1983 and has led the business for more than four decades.
Prologis owns and operates warehouses and distribution centres across the Americas, Europe and Asia, with a portfolio measured in the region of a billion square feet, and is among the largest real estate investment trusts of any kind. The company's tenants include most of the world's large retailers, parcel carriers and manufacturers, and the company has estimated that a substantial proportion of global gross domestic product flows through its buildings.
Early life and education
Moghadam was born in 1956 in Tehran, Iran. He left the country as a teenager to attend school abroad, and his family subsequently left following the revolution of 1979, an event that ended the possibility of returning.
He studied engineering at the Massachusetts Institute of Technology, taking bachelor's and master's degrees, and subsequently took a master's degree in business administration at the Stanford Graduate School of Business.
Career
Founding AMB
Moghadam co-founded AMB Property Corporation in San Francisco in 1983 with Doug Abbey and T. Robert Burke, the firm's name deriving from their initials. He was in his late twenties.
The business began as a real estate investment manager, raising capital from institutions to invest in industrial and retail property. The strategic decision that determined its future came in the 1990s, when the firm concentrated on industrial property near major transport infrastructure, on the reasoning that such buildings were essential to distribution, were relatively simple to operate, and were valued by the market below their economic worth because they were unglamorous.
AMB converted to a real estate investment trust and listed on the New York Stock Exchange in 1997.
The Prologis merger
In 2011 AMB merged with ProLogis, a Denver-based competitor of comparable size that had expanded aggressively before the financial crisis and had been severely damaged by it. The combined company took the Prologis name and moved its headquarters to San Francisco.
The transaction was structured as a merger of equals, with Moghadam and ProLogis's chief executive Walt Rakowich serving as co-chief executives through a transition period. Moghadam became sole chief executive at the end of 2012 and has held the position since.
The merger created a company of a scale no competitor has approached, and the years that followed were spent selling assets that did not fit, reducing the debt inherited from the ProLogis side, and concentrating the portfolio on a defined set of large logistics markets.
Consolidation and growth
Prologis has since grown substantially through acquisition, buying DCT Industrial Trust in 2018 for about US$8.4 billion, Liberty Property Trust in 2020 for approximately US$13 billion, and Duke Realty in 2022 for about US$23 billion, the last being among the largest real estate transactions in American history.
The underlying growth driver through this period was electronic commerce. An order delivered to a house requires considerably more warehouse space than the same goods sold through a shop, because items must be stored individually rather than in bulk, picked one at a time and processed for returns. Estimates that online retail requires roughly three times the logistics space of conventional retail per unit of sales became the standard argument for the sector, and demand rose accordingly, with particular intensity during the pandemic.
Prologis's specific advantage is location. Its buildings are concentrated close to large cities, where land suitable for warehousing is scarce, planning permission is difficult and existing uses compete for the same sites. This constraint on new supply, in the places where demand is greatest, is the source of the rent growth the company has achieved, which has substantially exceeded general inflation for much of the past decade.
Recent direction
From the early 2020s the company has developed two adjacent businesses. The first is energy: Prologis has installed solar generation and battery storage on the roofs of its buildings at scale, becoming a significant owner of distributed generation almost incidentally, since the roof of a distribution centre is a large flat surface with no other use.
The second, and strategically more significant, is data centres. The land Prologis owns near cities, with existing grid connections and power allocations, is among the scarcest inputs in the artificial intelligence build-out, and the company has begun converting sites and developing capacity for that use. Power availability, rather than land or construction capacity, has become the binding constraint on data centre development, and a company holding both land and electricity connections in constrained metropolitan areas is unusually well placed.
Approach
Moghadam is known for an approach to real estate that treats it as an operating business rather than as a collection of assets. The emphasis is on customer relationships with large tenants who take space in many markets, on development rather than purely on acquisition, and on the management of third-party capital through funds and joint ventures alongside the company's own balance sheet, which increases returns on the company's own capital and provides fee income.
He has been publicly critical of what he regards as short-termism in real estate investment and has emphasised holding assets through cycles, a position made easier by a portfolio in a sector where the long-run supply constraint is favourable.
Personal life and philanthropy
Moghadam is among a small number of Iranian-born chief executives of large American public companies, and has spoken about immigration policy and about his own experience of arriving in the United States as a young man and being unable to return home.
He and his wife have made substantial gifts to the Stanford Graduate School of Business, where a building bears their name, and to the Massachusetts Institute of Technology. He has served on the boards of both institutions.
Assessment
Moghadam's career is a case of a strategic bet held for forty years. The decision to concentrate on industrial property near transport infrastructure was made when such buildings were regarded as the least interesting category in real estate, and it was sustained through periods when retail and office property were considered far more attractive. The subsequent growth of electronic commerce validated the position comprehensively, and the company that resulted is larger than any competitor by a wide margin.
The 2011 merger was executed at the point of maximum difficulty for the acquired business, which is when such transactions are most valuable and most dangerous, and the integration and deleveraging that followed were completed without the failures that have attended comparable real estate mergers.
The risks are cyclical and physical. Warehouse demand follows retail sales and inventory levels, and the correction that followed the pandemic demonstrated that the sector is not immune to the cycle: leasing slowed and development starts fell sharply from 2023. Interest rates matter a great deal to a business that is capital-intensive and valued on yield. And the move into data centres, while logical, takes the company into a business with different customers, different technical requirements and considerably greater competition for the electricity that makes it possible.