Warehouse operator Prologis announced Thursday that it has formed a $1.6 billion joint venture with institutional investor GIC. The initial capital commitment will fund the development and ownership of 4.1 million square feet of build-to-suit logistics space across major U.S. markets.

The partnership will leverage Prologis’ (NYSE: PLD) development platform with GIC’s long-term investment. The venture will operate under Prologis’ asset management business, Prologis Strategic Capital. The structure is “designed to scale with demand as customer commitments are secured” and includes “additional capacity for future investments.”

“Build-to-suit activity continues to be one of the clearest signals of customer conviction across our business,” said Prologis CEO Dan Letter in a news release. “This joint venture with GIC builds on that momentum by pairing our platform and development expertise with a partner that shares our long-term perspective.”

The build-to-suit projects reflect a growing market trend of companies making long-term investments in their distribution networks. The custom-design approach allows customers to prioritize automation, throughput and location. For institutional investors, these pre-leased, purpose-built facilities provide a favorable risk profile.

Last year, build-to-suit projects accounted for over 60% of Prologis’ $3.1 billion in development starts.

“With strong e-commerce growth, the re-shoring of supply chains and resilient consumer spending, industrial remains a strong long-term investment theme in North America,” said Goh Chin Kiong, chief investment officer of real estate at GIC.

Prologis is the largest logistics real estate company in the world, managing 1.3 billion square feet of space ($230 billion in assets) across 20 countries.

Shares of PLD were off 0.6% at 11:24 a.m. EDT on Thursday, which was in line with the decline in the S&P 500.

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