Prologis (PLD 1.24%) is a behemoth in the real estate investment trust (REIT) sector. It’s the biggest REIT in the world, with a market cap of more than $100 billion. The global leader in logistics real estate has over $200 billion in assets under management, owning interests in 5,900 buildings with 1.3 billion square feet of space across 20 countries. Its warehouse properties are crucial in supporting global trade and e-commerce.
While Prologis is the leading REIT right now, it might not hold that crown a decade from now. Two REITs that could be worth more than Prologis in 2035 are Equinix (EQIX 1.04%) and Realty Income (O 1.63%). Here’s why they could grow larger than Prologis in the next 10 years.
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The data center leader has plenty of room to run
Equinix is already one of the largest REITs in the world at a market cap approaching $85 billion. It’s the leading data center REIT with 270 data centers in 35 countries.
The company’s data centers are crucial to supporting increased digitalization as they provide the backbone infrastructure for cloud computing and artificial intelligence (AI) applications. Demand for data center capacity is robust and growing. According to an estimate by McKinsey, the world will need to invest a staggering $5.2 trillion into building data centers equipped to handle AI processing loads by 2030 and another $1.5 trillion to support non-AI applications.
That’s enabling Equinix to expand its global data center portfolio. The company currently has 56 major projects underway in 24 countries. It will likely build many more facilities in the coming years. Demand for data centers is so strong that even Prologis has gotten into the space by using some of its available land to selectively develop data centers.
Steadily building a sector leader
Realty Income currently clocks in as the seventh largest global REIT with $59 billion of real estate assets in eight countries. It owns over 15,600 properties with 342 million square feet of space leased to nearly 1,600 clients. These properties span the retail (79.9% of its base rent), industrial (14.4%), gaming (3.2%), and other (2.5%) sectors. It focuses on investing in properties secured by long-term net leases.
The company has steadily expanded over the years by acquiring other net lease REITs, buying portfolios of net lease properties from other investors, completing sale-leaseback transactions with owner-operators, and investing in development projects. It spends billions of dollars each year to grow its portfolio. For example, it invested $3.9 billion in property acquisitions last year and acquired fellow REIT Spirit Realty in a $9.3 billion deal.
Realty Income has steadily diversified its portfolio over the years, opening the door to new growth markets. For example, it entered the U.S. industrial market in 2011, which is now a $2 trillion investment opportunity. It also expanded into Europe ($8.5 trillion total addressable market), U.S. casino properties ($400 billion), and U.S. data centers ($500 billion). Add in its core U.S. retail platform, and the REIT has a $14 trillion total addressable market opportunity.
The company has also taken a page out of Prologis’ playbook by creating a private capital investment fund platform to enhance its ability to grow. This strategy will enable it to tap the $18.8 trillion U.S. private real estate market (10 times the public REIT market). It’s working on launching its first fund (U.S. Core Plus Fund), which will enable it to acquire even more properties in the future while earning incremental management fee income.
Robust growth potential
Prologis has grown into the world’s largest REIT by building a leading global logistics real estate portfolio. It has enhanced its growth by developing data centers and launching private funds.
The company still has a lot of growth ahead. However, given the growth potential of rivals Equinix and Realty Income, it might not be the largest REIT in a decade. Either could knock Prologis off its throne within the next 10 years. That growth potential makes them compelling REITs to buy and hold for the long term.
Matt DiLallo has positions in Equinix, Prologis, and Realty Income. The Motley Fool has positions in and recommends Equinix, Prologis, and Realty Income. The Motley Fool recommends the following options: long January 2026 $90 calls on Prologis. The Motley Fool has a disclosure policy.