Welcome to the Prologis Q4 earnings conference call. My name is Amy, and I will be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. To ask a question during this time, you will need to press star then one on your telephone. Please note that this conference is being recorded. I'd now like to turn the call over to Tracy Ward. Tracy, please begin. Thanks, Amy, and good morning, everyone. Welcome to our fourth quarter 2020 earnings conference call. The supplemental document is available on our website at prologis.com under Investor Relations. I'd like to state that this conference call will contain forward-looking statements under federal securities laws. These statements are based on current expectations, estimates, and projections about the market and the industry in which Prologis operates, as well as management's beliefs and assumptions. Forward-looking statements are not guarantees of performance, and actual operating results may be affected by a variety of factors. For a list of those factors, please refer to the forward-looking statement notice in our 10K or SEC filings. Additionally, our fourth quarter results press release and supplemental do contain financial measures such as FFO and EBITDA that are non-GAAP measures. In accordance with Reg G, we have provided a reconciliation to those measures. This morning, we'll hear from Tom Olinger, our CFO, who will cover results and real-time market conditions as well as guidance. Hamid Moghadam, Gary Anderson, Chris Caton, Mike Curless, Dan Letter, Ed Nekritz, Gene Reilly, and Colleen McKeown are also here with us today. With that, I'll turn the call over to Tom. Tom, will you please begin? Thank you, Tracy. Good morning, everyone, thank you for joining our call today. I want to begin by acknowledging our team and their great work this past year. In an incredibly challenging year, our accomplishments were significant and possible because of the work we've done over the last 10 years building the best-in-class portfolio that is critical to today's supply chain and centered on our customers. During the year, we closed on $17 billion of M&A, further fortified our balance sheet with lower rates and longer maturities, generated over $1.1 billion in free cash flow after dividends, and importantly, continued to deliver sector-leading earnings growth. Since the merger in 2011, our earnings CAGR of 9.5% without promotes has outperformed the other logistics REITs by more than 350 basis points annually. This is the result of a unique business model which has consistently outperformed year- after- year. Turning to our view of the operating environment, our proprietary data shows that the strong demand we experienced in the third quarter has continued. Globally, leases signed in the fourth quarter were a record 65 million square feet, or more than 1 million square feet per business day. This was driven by new leasing, which rose 22% year-over-year on a size-adjusted basis. A broad range of customers signed new leases in the fourth quarter, led by consumer products, food and beverage, electronics, and healthcare segments. E-commerce activity accounted for 19.8% of new leasing. The need for speed and flexibility is also reflected in elevated short-term leasing, which was up 58% in the quarter as 3PL, retail, and transportation customers raced to secure space ahead of the holidays. Lease proposals remained at healthy levels. In the U.S., fourth quarter net absorption was the highest on record at $100 million square feet and in excess of new supply of $90 million square feet. Rents in our markets grew by 3.2%, with all the growth coming in the back half of 2020. We anticipate rents to grow by approximately 5% in 2021. Houston is the only U.S. market on our watch list. As a reminder, we moved Atlanta and Central Pennsylvania from our list in the second quarter. In 2021, we expect supply to decline year-over-year, balanced with demand at $280 million square feet each. Conditions are also healthy in our other markets across the globe. In Europe, rents began to rise in the fourth quarter, and we expect 2.5% of additional growth in 2021, led by Northern Europe and the U.K. The implications of Brexit have been largely positive for us. As we anticipated four years ago when Brexit was first announced, inventory disaggregation will eventually lead to higher inventory levels in both the U.K. and the continent. We're watching new supply in Poland and Spain, but for context, these two markets account for just 1.7% of our share of NOI. In Tokyo and Osaka, historic high levels of supply are being met with very strong demand. Over two-thirds of the development pipeline is already pre-leased, and we expect market vacancies to remain below 2%. For China, supply is moderating even as the market remains soft. In our portfolio, we leased a record 10 million square feet in the second half of the year, a credit to the great work of our new China leadership team. Turning to valuations, our logistics portfolio posted the largest sequential increase in a decade, rising 5% in the U.S. and globally, and are now nearly 6% above pre-pandemic levels. Applying this increase to our $142 billion owned and managed portfolio, we estimate the value of our real estate rose by $7 billion in the fourth quarter. We expect continued fundamental improvement in 2021 and beyond based on three drivers. First, a powerful economic recovery, including the highest GDP growth in the U.S. in more than two decades. The combination of corporate and personal savings, as well as significant governmental stimulus, is a loaded spring, which will translate to significant economic growth in the back half as vaccines continue to roll out. Second, the pandemic accelerated the retail revolution. The e-commerce penetration rate jumped 480 basis points to 20% of goods sold in the U.S. in 2020. Based on early reports, e-commerce holiday sales grew by at least 30%. While we expect the share of goods purchased online to grow further, a pause later this year would not surprise us as consumers expand spending on services and experiences over goods. Our customers continue to plan for the long term. Retooling supply chains for increased e-fulfillment should generate cumulative incremental demand of 200 million square feet or more over the next several years. Third, we expect higher inventory levels. Inventory to sales ratios remain near all-time lows. We believe this had an impact on our customer space utilization as it ticked down to 83% in the fourth quarter. We see early signs of inventory restocking as containerized import volumes in the U.S. rose 24% in November and are on pace to set a quarterly record. Longer term, the need for more resilient supply chains will lead to higher inventory levels. We estimate that a 5% increase in inventory levels would produce incremental demand of nearly 300 million square feet in the U.S. alone. These changes will take years to play out, driving strong long-term demand. Turning to results, the work we've done to create the best-in-class portfolio scale and lowest cost structure in the industry is delivering exceptional financial results. 2020 Core FFO excluding promotes grew by 14% and came in at the high end of our range at $3.58 per share. We also recognized record net promote income of $0.22 per share. Net effective rent change on a rollover in the fourth quarter was 28%, led by the U.S. at 32.1%, both high water marks for the year. Our in-place to market rent spread now stands at 12.8%, up about 60 basis points sequentially. Collections continue to outpace 2019 levels. As of this morning, we collected over 99% of fourth quarter rents and over 95% of January. Bad debt was 22 basis points for the quarter and 43 basis points for the year, both below our expectations. Our share of cash same-store NOI growth was 3% and led by the U.S. at 3.5%. We made meaningful progress on the sale of non-strategic assets acquired from Liberty. We settled disputes related to the construction of the Four Seasons Hotel Philadelphia at Comcast Center and the Comcast Technology Center. We completed the dispositions of our 20% ownership interest in the hotel and the previously announced portfolio in the U.K. To date, we have sold more than $600 million of former Liberty assets, exceeding our underwritten values by more than 18%. We now have less than $400 million of former Liberty non-logistics assets remaining, consisting primarily of our interest in the Comcast headquarters. For strategic capital, our team raised $3.1 billion in 2020, with 40% from new investors we have yet to meet in person. Market and property tours as well as due diligence activities were all conducted virtually as our team capitalized on our early investment in digital infrastructure. Our balance sheet remains the best in the industry, with liquidity and combined leverage capacity between Prologis and our open-ended vehicles of more than $13 billion. Our capital markets activity in the quarter brought our total average interest rate down to 2%. We will look for additional opportunities to refinance at attractive rates. In fact, at current interest rates in our mix of currencies, we could issue 10-year debt at a blended all-in rate of 1%. Turning to our guidance for 2021, here are the key components on an our share basis. We expect cash same-store NOI growth to range between 3.5%-4.5%. We're estimating bad debt expense to range between 20 and 40 basis points of gross revenues and average occupancy for our operating portfolio to range between 95.5% and 96.5%. We expect a seasonal occupancy drop in the first quarter, then trend higher as the year progresses. For strategic capital, we expect revenue excluding promotes to range between $435 million and $450 million. Promote revenue will be negligible in 2021. In fact, we'll have net promote expenses of $0.02 per share for the year, which relates to the amortization of costs from prior period promotes. Our historic net promote income has averaged approximately 20 basis points of third-party AUM, which would be $0.06-$0.07 of earnings per share based on current promotable AUM. Looking ahead, recent property appreciation leads us to expect net promote income per share in 2022 to be at or above this historic average. We expect to start between $2.3 billion and $2.7 billion in new development, with 45% build-to-suits and for stabilizations to range between $1.9 billion and $2.1 billion. Dispositions will range between $1 billion and $1.4 billion, with the majority expected to close in the first half of 2021. We're forecasting net deployment uses of $350 million at the midpoint, and as a result, our leverage will remain effectively flat in 2021. Putting this all together, we expect Core FFO, including the $0.02 of net promote expense, to range between $3.88-$3.98 per share. Core FFO excluding promotes will range between $3.90 and $4 per share, with year-over-year growth at the midpoint of more than 10%, delivering another year of exceptional growth. We enter 2021 with optimism and confidence. Our ability to deliver value for our customers beyond real estate using our unmatched purchasing power and significant investments in technology, innovation, and data are significant competitive advantages that will drive further outperformance. With that, I'll turn back to the operator for your questions. At this time, ladies and gentlemen, if you would like to ask a question, please go ahead and press star, then the number one on your telephone keypad. Your first question today comes from the line of Caitlin Burrows with Goldman Sachs. Please proceed with your question. Hi, good morning, everyone. Your guidance for 2021 development starts is almost 20% higher than starts of last year. Could you just go through what the balance of build-to-suit and speculative developments and how much kind of visibility do you have on that? Could it be increased further from here? Yeah, Caitlin, this is Gene. I'll take that question. You were breaking up a little bit, but I think you were talking about the development activity in the coming year. This year, about 85% of what we're guiding to are named transactions. We have very few placeholders. As Tom mentioned, we're 45% build-to-suit in the forecast, and it is really difficult to forecast how that's going to play out. If there is a bias, it probably is to the upside. At this point, we're comfortable with the forecast. Got it. Okay. Hopefully I'm better, but sorry if I'm still breaking up. If I could ask you a second, just Tom, you mentioned that short-term leasing was up. I was just wondering how those short-term leases compare to regular leases in terms of length and rents and the thought process on completing those versus longer-term leases. Thanks, Caitlin. You broke up a little bit there, but I think just how our thought process around short-term leasing. I think we're going to continue to see short-term leasing probably stay at elevated levels, just given the tightness of the market and the need for customers to act and move quickly as we get into 2021. I hope that addressed your question. Your next question comes from the line of Vikram Malhotra with Morgan Stanley. Please proceed with your question. Thanks for taking the questions. Maybe just first one, going to the core guidance, since you're an NOI guidance. If we sort of look at your components with the occupancy, on average, slight uptick, escalators, which I'm assuming 2.5%-3%. Your bumps that you're going to get from expirations, rent expiring. Seems to me that if I put all that together, you should be kind of well-- not well above, but above 4%. I'm just wondering if you can walk us through maybe what the puts are there and what would get you to the bottom end of that range. Yeah. The simplest way to look at it for same-store in 2021 is it's all driven primarily by rent change on roll. Think about 25% roll and I'm sorry, 15% roll, lease roll. From a GAAP perspective, think about 25%-ish of rent change on roll. As you mentioned, occupancy and bad debt are pretty consistent, don't move much year-over-year. That drives the GAAP same-store. From a cash perspective, think about that same 15% roll, call it 12%-ish rent change on roll. You're going to see bumps of around 3.25% on the portfolio in place, and then you'll see a little bit of normal free rent out of that. Those components should get you right near the midpoints of our guidance. Your next question comes from the line of Jamie Feldman with Bank of America. Please proceed with your question. Thank you. I was hoping to take a step back a little bit and just get your perspectives on the election and what you think it might mean in terms of policy or tenant reaction or customer reaction to just kind of new leadership in terms of what you think might change for warehouse demand. Whether certain markets look more interesting or any themes or trends you think we should be watching. I guess thinking about Biden's Buy America plan, wondering what your thoughts are on that as well. Thank you. Sure, Jamie, I'll take a stab at that. I think the most significant near-term thing is going to be the infrastructure spending, and that will have a positive effect on demand for our product. With respect to Buy U.S. first and all, we had that in the previous administration, but if you actually look at the numbers, they don't support the newspaper headlines. We don't think there's going to be a material change in that because we haven't had any of that in the last four years either, and that was pretty much the same promoted policy. The big drivers of our business is not necessarily economic policy. It's just a mix of consumption between bricks and mortar and e-commerce and the underlying growth rate of the economy, which should be very strong, bouncing from a down year, basically, and recovering all of that in 2021. We think those are the two big drivers, and economic policy will affect it a little bit around the edges, but not the main driver. Your next question comes from the line of Steve Sakwa with Evercore ISI. Please proceed with your question. Thanks. Good morning. I guess I wanted to take Tom's comment about the 65 million square feet of leasing in the quarter, which is exceptionally strong, maybe just look at Page four of the supplemental where you have that chart that shows new lease proposals and then the space utilization I'm just trying to square the proposals with the strong leasing, and then just curious why the utilization figure is trending downward and maybe not upward. Actually, I'm going to take that. It's pretty simple. People are running out of inventory because they haven't pre-positioned enough inventory in the system to support the level of activity. Remember, we need more inventory in the online channel than we do in the offline channel. One of the big issues with inventories is that we can't get the containers back to China. Actually we could support a much higher utilization, and lower levels of stock outs, but that's what's going on. Your next question comes from the line of John Kim with BMO Capital Markets. Please proceed with your question. Thanks. Good morning. In the fourth quarter, your development starts ramped up, but with a lower expected development margin of 23%, despite lower built to suit activity this quarter. Can you just comment on this dynamic and if this is a good run rate going forward on margins? Yeah, this is Gene, I'll take that. You are going to see and have seen for the past several years that our forecasted margins are quite a bit lower than our achieved margins, historically, because these are underwritten margins. Now we have been beating these margins for a variety of reasons. Rent growth, cap rate compression. I would expect, and I think we've been saying this for a long time, that you'll see over time margins will normalize. That really depends on what the future cap rate environment looks like. Your next question comes from the line of Nick Yulico with Scotiabank. Please proceed with your question. Thank you. I was hoping you could just talk a little bit about expectations for rent growth in the different regions this year, and maybe you can break that up if you see a difference between gateway distribution markets versus multi-market distribution, city distribution, and last touch. Hey Nick, it's Chris here. Yeah, we expect U.S. rent growth to be 5% in 2020 and a little bit better than 4% globally. In terms of the different product types, look, we highlighted a couple of geographies that we expect to outperform, for example, the U.K. and Northern Europe. In the United States, we've had a combination of the major last touch city distribution markets, as well as some gateway distribution markets outperforming. I'm thinking of New York, New Jersey, thinking of Toronto and Southern California. They outperformed in 2020. We expect them to outperform in 2021. Your next question comes from the line of Derek Johnston with Deutsche Bank. Please proceed with your question. Hi, everyone. Thank you. I would like to hear more about the evolving demand and leasing dynamics in the European portfolio, and really specifically when it comes to occupancy, which until last year was a bit of a headwind. It was slipping every quarter starting back in 4Q 2018. Now admittedly from a high point, but how do things feel on the ground in Europe? Have op mets in fact stabilized and can we expect growth from here? I believe this is the first positive year-over-year comp in six quarters. Thanks. Yeah, that may be the case in terms of the math of it. Europe is generally a more balanced market than the U.S. Demand and supply seem to move in sync together, and generally vacancy rates are lower. The two exceptions are probably, I would say the big exception is Poland. From time to time you get Spain sort of moving up to that volatile end of the market. The rest of Europe is very well occupied. It's really the volume of rollovers in Poland and Spain that drive that bounce in occupancy on the margin. Throughout, our occupancies in Europe have been higher than the rest of our portfolio, in the U.S. anyway. Your next question comes from the line of Emmanuel Korchman with Citi. Please proceed with your question. Good day everyone. Hamid, maybe this is one for you. Do you think that the Exeter EQT deal announced this morning provides any read-through to your private capital business? Well, I think our private capital business continues to be undervalued by the Street. All you got to do is look at the comps of publicly traded investment management firms. Once you consider the fact that well over 90% of our assets are in infinite life vehicles, and they generate significant promotes from time to time, and that our margins keep on increasing, I think that multiple should be in the low 20s. I think most of the NAV models that I see are in the low teens or maybe even 10. I think the Street continues to undervalue that business. Would it be worth more if we crystallize that value in a very specific transaction? Sure. Is it worth the headache on a company that has $140 billion of assets to move around the value by $0.50 or $1 a share? Probably not. We think there's upside to our NAV from our investment management business. Your next question comes from the line of Michael Carroll with RBC Capital Markets. Please proceed with your question. Yeah, thanks. Can you provide some color on the tenant demand you're seeing? I know in the beginning of the year, in the middle of the year, a lot of the demand or Amazon specifically has been extremely active. Have you seen or do you expect to see that tenant interest to broaden out more meaningfully as we move into 2021? Yeah. Let me start it. Mike can give you more color. We think demand is pretty broad. Sure, e-commerce gets a lot of the headlines, because on the margin, that is the source of new demand. There's plenty of demand from other sectors that continues and forms a strong base. Within the e-commerce sector, of course, Amazon is the biggest player, so they get a lot of play. Remember, Amazon is one change of our total ABR, and there are lots of other tenants that are doing well. In fact, I would say everybody's pretty much doing well, with the exception of the uses that support hospitality, like convention, exhibition people, and things of that nature. The rest of the market is pretty strong. Mike, you want to provide more color on that? Yeah. Let's look at it in traditional leasing and in build-to-suits. On the leasing front, their fourth quarter performance sort of normalized compared to typical Amazon members with us after a robust Amazon activity in quarters 2 and 3. The message there is, there's plenty of other companies, broad-based, that are driving traditional e-com leasing, and I think that speaks to the velocity going forward. On the build-to-suit side, yes, Amazon was very active. We did six build-to-suits with them in the quarter, and call it 10 for the year out of 28. However, there was a ton of restructuring well underway with the home improvement folks, food and beverage, healthcare, well underway with restructurings pre-COVID. Perhaps they took a couple of months' pause during COVID, but man, they're coming back with a vengeance and marching forward with those restructurings. While we'll see plenty of Amazon, I'm really encouraged at the other uses. We just signed a big lease with Kraft about a month ago and working with a ton of brand names next year we'll be happy to talk more about. Your next question comes from the line of Craig Mailman with KeyBanc Capital Markets. Please proceed with your question. Hey, guys. Maybe a follow-up to an earlier question, I think last year we were talking about the cadence potentially of development stabilizations, given kind of the buildup of starts and the resurgence there. And I'm just kind of curious. It looks year-over-year like that pace of stabilizations is expected to slow. Is there something going on there that changed that outlook? Well, the only thing I can think is that we deferred some starts immediately when COVID hit, because we didn't know what kind of environment we were in. We've essentially restarted most, if not all of those things, and will be restarting them. I think we just got that pushed out. The volume that's behind it is very significant. I would say the total level of stabilizations will be increased the next couple of years beyond what it would've been and what our expectations would've been, certainly at the beginning of COVID. I would say even more than our expectations at the beginning of last year, prior to COVID. Your next question comes from the line of Tom Catherwood with BTIG. Please proceed with your question. Thank you. Good morning. I wanted to go back to something Chris had mentioned about above-average rent growth for last-touch assets, which makes a lot of sense. Obviously, we understand the supply-constrained nature of industrial markets in major cities. It seems like nowadays every real estate developer is an industrial developer. Especially in New York City, we're seeing a big jump in infill industrial projects. Could this jump in development activity create a supply-demand imbalance and potentially put the brakes on rent growth for some of your last-touch assets? It could. I think what's going on in New York and elsewhere is that there's a lot of price discovery. Nobody really knows what the ability to pay is for some of these customers. In all of these locations, we've underestimated the rental value. At least for the time being, all the price discovery has been good. The other thing you should take into account is that in these infill locations, you could have a lot of developers, but you're not going to have a lot more land or buildings that can be rehabilitated. I think you'll see it in terms of pressure on pricing of those assets more than you would see it on absolute supply, because the supply is pretty inelastic, and it will show up in price. Your next question comes from the line of Blaine Heck with Wells Fargo. Please proceed with your question. Great. Thanks. Good morning. I was hoping to get a little bit more color on the investment sales market and your interest in acquisitions. There have been several large portfolios in the U.S. specifically that have traded either in the second half of last year or early on this year. I know you guys typically are looking at anything sizable that hits the market. Without getting into specifics, unless you want to, can you just talk about what's kept you on the sidelines in these situations? Is it pricing and underwriting being stretched? Is it more of the geographic footprint that just doesn't overlap enough? Maybe it's just your focus more on development at this point. Any color there would be helpful. All of the above. Let me give you a quick answer, and Gene will fill in the blanks. We are not good buyers of core real estate, auctioned by a brokerage house where there are 55 people showing up at the margin. A lot of these people have to build up their industrial capability and everybody's trying to get into that business because the other property types don't offer very many opportunities. Those guys are just duking it out on price is not our business. That means that building out our land bank, doing value-added acquisitions where we can bring our leasing and operational expertise to the table, deals that are hairy, et cetera. General framework for looking at deals is returns, how we can differentiate and have a competitive advantage, and also in the case of portfolio deals, what the fit is. If we have to buy 100 buildings and sell 90 of them, that's probably not a very attractive transaction for us. The other thing I would just mention is that you posed the question in the sense that we're only going after big deals. We do a lot of $5 million deals, too. They just don't show up. We're there looking at pretty much everything that moves out there, and we're there with offers on most, if not all of the ones that meet our quality standards. Thankfully in a lot of those core situations, we lose. We're good with that. We're on the selling side of a lot of those transactions as well. Yeah, I'd just add a couple of things. Last year, we had 300 matters go through our investment committee. As Suneet said, we look at a range of deal sizes, and we look at every single deal. Every single deal, we'll underwrite it, we'll look at it. We're a bit picky on quality. That's an explanation. We execute when it makes sense for us. I wouldn't read into this that we're uninterested. Your next question comes from the line of Dave Rodgers with Baird. Please proceed with your question. Yeah. Hi there, Tom. I wanted to follow up on something you said earlier about a larger percentage of short-term leases, I think, in the fourth quarter. We did see lease economics erode just a little bit. It was marginal, but we did see it happen. I'm wondering if the economics were just a delay from COVID era or if you're doing these shorter term deals aren't having the right amount of lease economics or the same lease economics, I should say. Just to tie in another question, I'm not sure if it's related or not. You guys have lost a little bit of occupancy in your 250,000 sq ft-500,000 sq ft boxes, really offsetting the gains in the one to 250 size range. Is this having an impact on the economics? I'm trying to figure out where the economics are going and what's driving these kind of economic occupancy trends. Dave, I'll take both of those. On the first one, remember, leases less than one year are excluded from our leasing metrics. That's consistent with what we do across the agreement we have with the other logistics around metrics. What's happening is if you're looking at turnover costs, it's the higher mix of new leasing versus renewals. We saw that in Q3, we saw it in Q4, and that is what is driving turnover costs slightly higher this quarter, and same story last quarter. Regarding economics, we did see space sizes under 100,000 sq ft, ending occupancy went up 100 basis points. I wouldn't look at the other segments. They're quite strong. I think that's just some activity that happened at quarter end and it's noise, and all segments are doing quite well. Your next question comes from the line of Eric Frankel with Green Street. Please proceed with your question. Thank you. This might be related to Blaine's earlier question, just about capital allocation. You mentioned that you sold most of the non-industrial assets from the Liberty portfolio, but looks like your held-for-sale portfolio is still somewhat elevated. Maybe you could talk about the pace of those sales going forward. Secondly, just around the operating portfolio. It looks like Bay Area occupancy went down about 300 basis points or so quarter- over- quarter. Maybe just comment on how the local economic environment there is affecting industrial demand. Thank you. On the pace of sales, we match it with our needs for capital. We're, depending on how you measure it, 19%, 20% levered. We don't want to dilute ourselves. Those assets are doing nothing other than appreciating. We'll take our time with respect to selling the industrial assets, and we'll match them with our capital needs, self-funding model. With respect to the Bay Area, my general comment, and Gene may want to say more about this, is that the Bay Area is soft. There's no question that the Bay Area, after almost a decade of straight run-up, has gotten hit pretty hard in this downturn. I would say it's softer than L.A. in a big way. The good news is that there's been so much rental appreciation that even as these leases expire, you still in many cases are rolling them up to market, but the market is just not as high as it would've been say a year ago. Yeah, Eric, the only thing I'd add on San Francisco, agree with everything Hamid said. The one thing to keep in mind, vacancy is 6%-6.5% in the San Francisco Bay Area. It isn't as if you have a weak conditions on top of a very high vacancy rate. We're watching it and obviously the performance is very much disconnected with L.A. Fundamentally vacancies are not bad right now. One other thing I would say about the Bay Area, I think the number is 10, maybe 12 million square feet has been taken out of supply in the last five years or so. That trend continues because the competing land uses just gobble up industrial. Actually, it's one of those markets where supply in the core Bay Area sub-markets is actually going down. It's being converted to life science, it's being converted to apartments, all kinds of other things. Your next question comes from the line of Brent Dilts with UBS. Please proceed with your question. Hey, thanks. Occupancy globally saw a nice improvement in 4Q, but could you talk about what drove the strong rebound in ending occupancy in Asia specifically? We got a new team in place in China that has been very aggressive in leasing space. Our vacancy in the company on the spec basis was in China. We're addressing that. The new team has done a fabulous job. Your next question comes from the line of Jonathan Petersen with Jefferies. Please proceed with your question. Great, thanks. Yeah, Hamid, I was hoping maybe you'd pick up on what you were just talking about with the Bay Area, and maybe just think more broadly. I'm just looking at your top four markets in the U.S., Southern California, New York, New Jersey, Bay Area, and Chicago. Obviously places that through the pandemic have seen decent outflows of people into the Southeast. I realize that supply is constrained in those markets, but I'm just thinking in terms of incremental investment going forward. Do we expect more investment in places like Dallas and Atlanta and Florida, places that are benefiting demographically, or do you think you kind of expect things go back to how they were? Look, I think all of the markets that you mentioned were running so far above trend for a decade. That has created so many imbalances that I actually think it's pretty good to take a breather for some of those markets. No, I don't really think California's falling into the ocean. There are a lot of people in the middle of the country cheering for that. It's not going to happen. I mean, just look at the last quarter. Look at the market cap that's been created in this area. It's probably more than it's been created in a decade in some of those markets. No. The numbers are actually pretty interesting if you look at the overall California numbers. I don't have them specifically for the Bay Area. This year, and the way they measure it's a June 30 year-end, but in the year end of June 30, you had 260,000 people move out of California. That compares to the year before, like a more normal year, about 230,000 people. There is always this churning that happens, but all of that is about half a percent of the total population of California, and you still have internal growth. California is still growing. It's just not growing at the same pace as it was before, and I think some of the outflows have to do with temporary work from home kind of situations. We don't expect all of those things to last forever. You'll have some people coming back to California. I think housing prices have moderated, certainly on the rental side. Yeah, I think California is softer than it's been, but it's been on such a tear that it would have had to come to some kind of a moderation, and it has. Your next question comes from the line of Ki Bin Kim with Truist. Your line is open. Thanks. Good morning out there. You've already touched on this, but maybe I can follow up on it. Have your underwriting standards parameters changed at all looking into 2021? On the margin, where do you think you differ versus the average industrial builder or buyer? I think our underwriting has moved down with the required returns have moved down in the same direction as the weighted average cost of capital has moved down. Capital market returns are lower, so real estate returns are lower as well. What we really look at is relative value, and in a lot of these situations, the weight of the money coming into the industrial sector has created the situation where good assets and bad assets or not so great assets, the yield is compressing between the two. People just want to tick that industrial box. A lot of those people also tend to be leveraged buyers in which they can take better advantage of those lower rates. The way we underwrite the assets in terms of quality and the ability of those assets to compete in the marketplace, that has never changed. That's the primary filter. Obviously because of higher rents and lower cap rates, pricing has changed. Your next question comes from the line of Mike Mueller with JP Morgan. Please proceed with your question. Yeah, hi. Looking at USLV and PELP, you know the ownership stake is about 50% there. Do you see that gravitating down anytime soon? USLV is our venture with Norges. Actually, they're both our ventures with Norges, and our deal with them was that we would be 50/50 partners, and we have certain rights to sell down to 20% in one of those ventures. No, we like it. It's been a good investment, and we continue to hold it. We've got plenty of capital coming from other places, mostly dispositions. We haven't tapped that source for capital. It's there if we need it, but I don't think we're going to need it for quite some time. We can self-fund out of the non-strategic dispositions and also our contributions. Your next question comes from the line of Nick Yulico with Scotiabank. Please proceed with your question. Hi, this is Timothy of InterNick. You've been recently doing a lot more analysis on labor shed depth, as well as availability in some of your markets, for example, in Atlanta. Some markets seem to sell themselves, like Inland Empire, no one puts out a flyer more than a page long. I'm interested in understanding whether the labor shed or labor availability issue, is it back, or is it in certain markets? If you could shed some light on what markets is it a problem in, if it is. You weren't coming through perfectly clearly, but I think your question was, is labor continuing to be a constraint? The answer is yes, pretty much everywhere. I was really surprised, frankly, when I heard from our large customers, I think back in April and May in the early stages of COVID, relatively early stages of COVID, that labor continues to be their number 1, number 2, and number 3 problem. I thought it would have moderated given the downturn and the unemployment rate. The key in that calculus is quality of labor. We've taken a lot of steps, as you know, with our community workforce initiative to try to address that to our customers. No matter how hard we work or how large that initiative gets, it's not going to even begin to make a dent in the problem that we have. Are there geographical differences from place to place? For sure. Those geographical differences have already adjusted because people don't put their warehouses in places where there is no labor whatsoever. They put it in places where there is labor, but there is just not as much labor as they would like. They're all competing with one another, and the turnover rate in that kind of labor is very high. It's about 40% a year. People move for relatively small changes in compensation and environment. Customers are paying more attention to environment and all those amenities that can really be more attractive to labor, in addition to paying more. Your next question comes from the line of Jamie Feldman with Bank of America. Please proceed with your question. Thanks for taking the follow-up. We've seen some news on Prologis buying some urban land lately. I'm just curious, how should we think about multi-story as a composition of your 2021 development starts? Similarly, with the rotation from bricks and mortar to e-commerce, any additional thoughts from the research you put out on retail conversions and maybe that becoming a larger part of your 2021 development starts? Well, Jamie, I don't know what papers you're referring to, but we've been buying urban land in terms of covered land plays for at least seven or eight years in a pretty steady basis. We've been at this business for a long time, and we're broadening it in certain markets. No, we've been after it for quite some time, and it's not just in the U.S., also in Europe, we're buying those covered land plays. Those can be either leased as staging areas. You can get very good returns on those while you wait for the market or rents or entitlements to convert them to industrial land. We don't have a multi-story strategy specifically. We have an infill strategy, and that infill strategy drives you to multi-story in certain locations with certain land economics. There's nothing in our business plan that says, Thou shall build three multi-story buildings this year. I mean, we're very opportunistic in that sense. Your next question comes from the line of Emmanuel Korchman with Citi. Please proceed with your question. Hey, Tom. Earlier, I think you discussed 200 million square feet of incremental demand over the next few years. How much of that do you think can get taken care of by just innovation within the existing boxes, rejiggering, automation, more racking, et cetera, versus true incremental demand that's going to lead to leasing from your end or others? Actually, Chris is probably in a better position to answer that. We've done a lot of work around automation and modernizing space. Chris, why don't you talk to that? Yeah, sure. The stat that Manny's referring to, e-commerce specifically, we expect it'll generate 150 million square feet, perhaps more in the U.S., 200 million square feet, likely more globally. Manny, no, I don't think it's about efficiency and the introduction of technologies. I think this is about needing to strengthen supply chains over time. As it relates specific to automation, the research we've done is to take a look at the productivity of assets, both through the brick-and-mortar supply chain as well as the e-commerce supply chain. We don't see a lot of change there. Instead, when we look at that incremental 200 million square feet going forward, I think you're going to see that focus on last touch locations and city distribution locations, particularly in the world's global markets, those 24-hour cities. As Mike was referring to earlier, I think there's going to be a lot of diversity in that customer mix. A lot of customers are starting to reassess how they want to go to market with e-commerce in 2021 and beyond. I think you're going to see a lot of diversity there. It's much more about bringing in new real estate requirements rather than introducing technology. Yeah. If I can jump at the end of that, I didn't answer a part of Jamie's question about retail conversions. Look, you have our latest thinking in that in Chris's paper. I don't have a whole lot to add to that. I think you will see more headlines about that than actual space converted, but you will see some space converted for a variety of reasons that you can read about in the paper. Your next question comes from the line of John Kim with BMO Capital Markets. Please proceed with your question. Thank you. On the Liberty portfolio, originally you considered $3.5 billion of dispositions. Now it looks like you're looking to sell about $1 billion, partially because you don't really need the proceeds. Can you just refresh with us how much of Liberty's original portfolio you consider non-core for the company going forward? That view hasn't changed. It's about three and a half still. Of that three and a half, if I remember correctly, about $700 of it is not logistics. Put it this way, it's office and suburban office. We've sold some of that. The only thing that really remains on that front is the downtown Philly assets leased to Comcast. The rest of the assets that are available for sale are just straight up industrial. These assets would be considered in the top, I don't know, 25% of most portfolios out there. It's just that they don't quite meet our standards, but they're perfectly fine assets, and they're appreciating. As you heard, I think Tom mentioned that even on the non-industrial ones, we picked up 18% more value than we underwrote. On industrial, I think we're even going to do better than that. It's just no sense of we could sell it at a really high price right now, but if the capital's sitting around not doing anything, we'll give a bunch of it back in terms of solutions. We're going to be patient with that. John, that was the last question. Again, everyone, thank you for being on our call, and we look forward to talking to you during the course of the coming quarter. Take care. This concludes today's conference call. Thank you for your participation. You may now disconnect.