Unified Industrial Completes, Finds Buyer for Osaka Shed Project With Macquarie

Tokyo-based Unified Industrial has completed and sold the first phase of its warehouse complex in Shiga prefecture northeast of Osaka, as shed developers race to add supply in support of the e-commerce sector in Japan’s Chubu and Kansai regions.

A consortium of Japanese investors acquired UI Konan Phase I, with Unified Industrial continuing to act as asset manager of the project, the builder backed by Australia’s Macquarie Asset Management said this week in a release. No financial details were disclosed.

The UI Konan development will span more than 250,000 square metres (2.7 million square feet) of gross floor area delivered in two phases. The first phase, measuring 59,200 square metres of net rentable area, was fully pre-leased to Nippon Express, one of Japan’s largest third-party logistics operators, before construction began.

“We are pleased to have completed the sale of UI Konan Phase I at an attractive valuation that reflects the quality of the asset and the strength of the Japan logistics market,” said Unified Industrial founder and CEO Joshua Olsan. “This transaction is a testament to our ability to identify, acquire and develop high-quality, prime logistics real estate for our investors.”

Opportunistic Fund Support

The transaction marks the first divestment of a greenfield development since Unified Industrial entered a partnership in 2021 with Macquarie’s Real Estate Partners Asia I opportunistic fund, which closed on A$1.1 billion (now $740 million) in committed equity that same year.

The partnership with Macquarie-managed funds has provided capital for executing on a “robust portfolio” of pipeline projects across key markets, Olsan said.

Unified Industrial began construction on UI Konan’s first phase in February of last year and broke ground on the second phase in late 2023. The complex’s location in Shiga is 200 metres (219 yards) from National Road 1 and 1.5 kilometres (0.9 miles) from the Ritto-Konan interchange, providing connectivity to neighbouring prefectures.

Built to Japan’s CASBEE A standard, UI Konan uses rooftop solar panels, LED lighting with motion sensors and a rainwater recycling system. The solar panels will support nearly half of Nippon Express’s annual power usage, said Unified Industrial, which has developed and invested in 232 projects in Japan and China since the company’s inception in 2008.

Market Adding Supply

Logistics vacancy in Greater Osaka — defined as Osaka, Kyoto, Hyogo and Nara — has been trending upward, according to Savills, with about 1 million square metres of gross floor area coming to market in 2023 and new supply likely to increase further over the next two years.

Greater Osaka logistics vacancy as of January was 3 percent, up 0.6 points year-on-year, the consultancy said in its latest report. Average monthly rent rose 2.4 percent year-on-year to about JPY 13,990 ($96) per square metre.

“The logistics sector continues to perform well overall, but the large new supply over the past year has loosened the market, with vacancy rates rising as some new properties struggle to fill available floors,” Savills said. “The industry will face a number of challenges moving forward, including the sustained influx of new supply and labour regulations that may dampen operations.”