ESR backed by Warburg Pincus to build $1.5 billion logistics park in Osaka amid e-commerce boom

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Listed in Hong Kong ESR Cayman—an investor-backed warehouse developer including Pincus de Warburg and Singaporean tycoon John Lim — is building a $1.5 billion logistics park in Osaka, Japan over the next few years to meet growing demand from e-commerce players and logistics companies.

Built on a site covering more than 500,000 square meters in the city of Kawanishi, approximately 5 kilometers north of Osaka Itami Airport, the ESR Kawanishi Distribution Center will be developed in two phases. The first phase will consist of two six-storey blocks with a combined gross floor area of ​​almost 200,000 square meters which is expected to be completed by December 2024. Two additional buildings will be constructed in the second phase of development from 2025.

“This is a broad master plan that will help meet the growing demand for large-scale, state-of-the-art logistics space in Greater Osaka, while enabling the region to solidify its leading position as a hub global logistics,” said Stuart Gibson, co-founder and co-founder. -CEO of ESR Cayman, said in a declaration. “This development also unlocks the full potential value of the site and benefits the long-term development of the region.”

Osaka is one of the fastest growing logistics markets in Japan, with warehouse vacancy rates in the region around 1%, the lowest since 2017, ESR said, citing data from the real estate consultant Cushman & Wakefield. The rise of e-commerce and increasing investment by businesses to automate their logistics operations and digitize their supply chains are among the factors driving unprecedented demand for warehousing space in the country.

This bodes well for existing ESR facilities in the Greater Osaka metropolitan area. For example, the ESR Amagasaki distribution center (the largest in Asia Pacific with nearly 390,000 square meters of space) is currently 98% leased to a diverse tenant base, including e-commerce players.

To capture this strong demand, ESR Cayman – which completed its acquisition of Singapore-based ARA Asset Management in January in a successful deal that transformed the company into Asia’s largest property management platform with assets under management of more than $140 billion – strengthened its logistics facilities, data centers and other new economy assets in the region. Last month, it bought a portfolio of 11 warehouses with a gross area of ​​550,000 square meters in the largest such transaction in the greater Shanghai area.

ESR – which also counts Chinese e-commerce giant JD.com and Singaporean billionaire Chew Gek Khim’s Straits Trading as major shareholders – was among the most active investors in logistics properties in 2021. The company closed more than 10 billion dollars of transactions last year, including the purchase in April of a portfolio of warehouses across Australia from Blackstone for A$3.8 billion ($2.8 billion). Global investors poured a record $48 billion into Asia-Pacific logistics investments last year, up from $32 billion in 2020, JLL said in a report released last month.

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