ESR to Build 60MW Tokyo Project as Fourth Japan Data Centre

ESR Group is developing a 60-megawatt facility in Tokyo for its fourth data centre location in Japan as the industrial specialist doubles down on a sector it expects will drive its continued expansion.

The HKEX-listed developer and fund manager announced on Thursday that it will commence construction by the second quarter of next year on the facility in Koto City, an eastern ward of the Japanese capital that borders Tokyo Bay.

With Japan still lagging other developed economies in terms of cloud capacity, the project boosts ESR’s pipeline of data centre projects in the country to 320MW, with the company’s leadership hailing the development in Koto City’s Ariake ward as a milestone for a digital infrastructure business it first unveiled in 2020.

“Data centres are a key growth engine for ESR, and our Ariake development expands our portfolio across Japan and APAC,” Stuart Gibson, ESR co-founder and co-chief executive officer (CEO), said in the statement. “Japan is one of the largest and fastest growing data centre markets in the world and our Ariake project will be transformational in terms of the amount of capacity it will bring to Central Tokyo.”

2028 Completion Eyed

ESR said that adding its fourth Japan data centre project helps to cement its leadership in the region’s new economy real estate sector after it raised $1.35 billion in fresh equity for its inaugural ESR Data Centre strategy in 2022.

With 1.5 gigawatts of capacity in the pipeline across Asia Pacific, data centres now make up 13 percent of ESR’s $14-billion development workbook and are expected to play a growing role in generating income for the group.

The Ariake project is planned to be operational by the fourth quarter of 2028 and aims to provide scalability and connectivity for hyperscale, cloud and large enterprise clients, according to the announcement.

Preparing to serve an AI boom in the region, ESR noted that the facility will be capable of achieving higher rack densities, as well as incorporating energy efficiency and building design features to support the complex and heavy workloads involved in AI and machine learning.

Leveraging Existing Hubs

ESR Data Centres CEO Diarmid Massey said time-sensitive applications and future IT demand in urban areas call for data centres in locations like Ariake that benefit from proximity both to a large urban population and to existing data centre hubs.

“In Tokyo and Osaka, there is increased demand for modern, energy efficient data centres to replace aging digital infrastructure,” Massey said. He added that: “ESR continues to partner with operators and hyperscalers to grow our data centre portfolio across APAC.”

The Ariake project is roughly 50 kilometres (31 miles) from western Tokyo’s Higashikurume City where ESR is currently developing a 30MW facility on a 20,900 square metre (225,000 square feet) site it acquired in 2022.

In December of that same year, ESR joined hands with US-based operator Stack Infrastructure to begin work on a data centre facility in Keihanna, an eastern suburb of Osaka, that is expected to support 100MW of IT load capacity once completed in the second quarter of 2025. The company also has data centre projects in progress in Seoul, Sydney, Mumbai, and Singapore.

ESR announced its latest Japan data centre projects just days after it revealed that it has received a buyout offer from a consortium of investors including Starwood Capital, with talks concerning that potential privatisation still ongoing.

Foreign Players Flock to Japan

ESR’s Tokyo project aligns with a wave of Japanese data centre commitments this year by global heavyweights.

Last month, Microsoft said it would invest $2.9 billion over the next two years to boost its cloud and AI infrastructure in Japan, including expanding its data centres. That initiative was announced after Singapore’s Keppel Ltd in March signed a deal with Japan’s Mitsui Fudosan that would give the Singaporean company its first server facility in the country.

In January, Australian industrial specialist Goodman Group announced plans to develop a 1GW data centre in Ibaraki prefecture north of Tokyo.

This string of big bets on Japan’s digital infrastructure boosts the country’s leading position among APAC digital infrastructure markets with a report by Cushman & Wakefield earlier this year ranking the country second in the region with with 1.3GW of operational capacity, trailing only mainland China’s 3.9GW capacity.