Real estate investment trust Prologis plans to substantially increase its data center portfolio over the coming decade.

The logistics and industrial real estate giant began expanding into the data center sector during the Covid 19 pandemic. It often partners with Skybox Datacenters for the actual building of the facilities, which are leased or sold to hyperscalers or other data center operators.

Prologis currently has 1.4GW of secured power for data centers in its pipeline, with another 1.6GW "in the advanced stages of procurement," Dan Letter, president of Prologis, said in an earnings call.

The company published those power figures last year, but Letter said that "we've been just getting deeper on our pipeline and have a lot more confidence in the numbers that you've heard."

He continued: "We've got another 1.5GW of applications that are right behind that. But all in, it's 10GW over the next ten years."

That 10GW could grow further, he added: "And that doesn't even touch upon the universe of opportunities. This is coming from a portfolio of 6,000 buildings and 15,000 acres of land that we own or control. So the universe of opportunities is much greater than that."

This quarter, the company sold an Elk Grove data center it developed with Skybox in Chicago. The project began as a logistics asset "that we converted to a powered shell before securing a build-to-suit turnkey transaction with a hyperscaler last Fall," CFO Tim Arndt said. The site was sold to asset manager HMC Capital.

CEO Hamid Moghadam added: "Elk Grove started out being a powered shell and ended up being a turnkey. So that will maybe increase the capital spend by a factor or two."

The growing scale of its data center business has the company evaluating how it monetizes the sector, Moghadam said.

"We have not yet made the decision as to what we're going to do with the capitalization of our data center business long term. Let me tell you what the current thinking is. The current thinking is that we are a developer, and that we'll monetize and sell these assets upon completion. And we use the capital that they generate as a way of expanding our core logistics business. That's the strategy today.

"We may expand that strategy to include a fund management approach, either a dedicated fund or possibly expanding the investment mandate of some of the existing open-end funds - obviously after talking to our investors about that - as a way of including some data centers within limits within those funds. That decision hasn't been made because right now, we're thinking about it as a funding mechanism for our core logistics development business. But we may change course on that."

He added: "One thing we will not do is hold 100 percent interest in data centers on our balance sheet because the capital requirements of that are going to be - even for us, are going to be pretty significant."

Prologis' data center efforts have been led by Compass co-founder Chris Curtis since last year.