Amazon Leases Nearly Half of ESR Tokyo Area Logistics Centre

ESR has landed Amazon as an anchor tenant for one of its Tokyo area logistics facilities, as the Warburg Pincus-backed specialist continues to capitalise on the demand for logistics space fuelled by the growth of e-commerce in Japan.

The online shopping giant has signed a lease for 72,392 square metres (779,221 square feet) at ESR’s Kuki Distribution Centre, a year-old warehouse facility just under fifty kilometres (30 miles) north of central Tokyo in the Saitama prefecture city of Kuki, according to an announcement by ESR.

The long-term lease, which brings the occupancy rate of the 151,500 square metre project to 97 percent, is the third reported major agreement which Amazon has signed with ESR in Japan.

The agreement, which is reported by Japanese local media to expire in 2024, comes three months after the developer and fund manager raised HK$14 billion ($1.8 billion) in Hong Kong’s second-largest listing of 2019.

Deepening a Prime Relationship

“We are very excited to further expand our partnership with Amazon as it firmly demonstrates the continued demand for ESR’s strategically located, state-of-the-art logistics facilities, and the confidence we have earned among major domestic and international clients,” said Stuart Gibson, ESR’s co-founder and co-CEO.

The Kuki City lease comes just over a year and a half after the company leased its entire 64,000 square metre Ibaraki facility in Greater Tokyo to the e-commerce giant in 2018, according to ESR’s IPO prospectus.

Local Japanese media also reported that Amazon agreed to a long term lease of ESR’s entire 177,560 square metre Fujiidera Distribution Centre in Osaka after its completion in 2017.

Across Asia Pacific a large portion of the demand for ESR’s warehouses has come from e-commerce tenants, with roughly half of the tenants across its 15.3 million square metre portfolio being e-commerce operators, including its operation in Japan,.

Feeding a Need for Modern Sheds

Linked to Japan’s capital via major highways, ESR completed the Kuki City facility in 2018, and the company now has a portfolio of 26 facilities in operation or under development in Japan which have been valued at $7.6 billion.

According to the company, it has delivered nearly one million square metres of development projects in Greater Tokyo, Osaka and Nagoya over the past three years, boosting its gross floor area in the country to 3.1 million square metres, as it races to meet the demands of e-commerce.

“In recent years, with the transformation of the logistics value chain to support the rapid rise of e-commerce, there is a growing need for highly functional, sophisticated and large-scale distribution facilities in strategic locations such as Greater Tokyo,” said Gibson, adding that occupancy rates at ESR’s Japan facilities were high.

ESR says it has designed the Kuki City facility in line with “human-centric” and environmentally friendly principles.

Workers at the four storey distribution centre can benefit from private lounges and free childcare services, while rooftop solar panels generate 2.3MW of clean energy, according to ESR.

Gibson said that the introduction of these services and amenities follows the company’s vision of “being a ‘customer-first’ platform with an unwavering goal of identifying and delivering integrated logistics warehousing solutions in prime locations”.

ESR Expands Post-IPO

With global assets under management worth $20.2 billion, ESR has also focused on developing its business in Australia since listing on the Hong Kong stock exchange in October.

Just under a month ago, the company announced an A$138 million mandate to raise fresh capital by offering investors access to a set of its Australian business parks and other logistics assets.

That announcement came a month after ESR established a A$350 million mandate with China Merchants Capital to invest in logistics assets down under.