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Data Centres Take Over Tokyo

Tokyo welcomes a wave of “new economy” assets as the number large-scale data centres in the area rises rapidly in recent months

October 25, 2021 – The development of large-scale data centres for tech giants like Google and Amazon is progressing rapidly in the Tokyo metropolitan area, and this expansion is projected to continue until 2025. 

According to the latest issue of the Nikkei Real Estate Market Report, Tokyo is seeing an uptick in demand for hyperscale data centres. 

Research company International Data Corporation Japan said the aggregate gross floor area of domestic hyperscale data centres, which was less than 400,000 square metres in 2020, will exceed 1.2 million square metres by 2025.

Nikkei conducted a survey on large-scale data centers completed or scheduled to be developed in the Tokyo metropolitan area during or after 2020. The survey showed that seven out of the 11 data centres, as of September this year, are concentrated around Chiba Newtown Chuo Station on the Hokuso Line in Inzai City, Chiba Prefecture, which is in an area approximately 35 km northeast of central Tokyo.

“Japan, which is said to be lagging behind foreign countries in terms of the spread of such services, is a promising market where the winners and losers among business operators will be decided going forward. This is unlike foreign countries where competition for market share has already been somewhat settled,” Nikkei said. 

Real estate companies and investors are also starting to turn their attention to data centres as a new asset class.

Amid uncertainty over the future of offices, retail facilities and hotels due to the Covid-19 crisis, data centers are increasingly seen as an asset with similar characteristics to residential properties. They are considered to be stable investments with predictable growth, Nikkei said. 

Big Names Are Entering the Market

Giant corporations, such as Amazon, Microsoft and Google, which can afford the cost required from the procurement of sites to operating the facilities are moving rapidly into the area.

A special purpose company of Google acquired 31,185 square metres of land in the entire Kaguro-Minami 3-4 Block, Inzai City, round Chiba Newtown Chuo Station, in November 2020. 

Amazon and Microsoft are also reportedly setting up shop in the area. 

Nikkei, citing media reports, said that Microsoft Azure is operating a data centre in Shinonome 1-chome, Koto-ku. The facility has five floors above ground with a gross floor area of 19,045 square meters and was developed by Kona GK. 

Nikkei also said that Amazon Web Services (AWS) may also have secured space at MFIP Inzai. The facility was developed by Mitsui Fudosan, completed in May 2020 and acquired by REIT Mitsui Fudosan Logistics Park (MFLP) in March 2021. 

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