Mitsui Fudosan Co., Japan’s biggest developer by sales, said it plans to invest 200 billion yen ($2.3 billion) in warehouses in the country over five years to meet rising demand.
The company plans to build four to five storage properties a year and complete the investment by the year ending March 2018, according to an e-mailed statement by the Tokyo-based developer. Mitsui Fudosan is also considering setting up a logistic real estate investment trust, according to the statement, which didn’t elaborate on the plan.
Mitsui Fudosan is joining the competition in developing industrial buildings used for storage, a market that has been dominated by foreign companies such as Global Logistic Properties Ltd. and Prologis Inc. Japan’s distribution centers are rebounding from record-high vacancies in 2009 amid demand for modern storage facilities, according to broker CBRE Group Inc.
Mitsui Fudosan began building its first storage facility in Chiba prefecture, east of Tokyo, in December with Global Logistic, according to the statement. The company is currently developing six logistic facilities with five in the Tokyo metropolitan area and one in Osaka, it said.
Japan is Prologis’s biggest market in Asia, accounting for 10 percent of total assets, according to the company. Mitsubishi Estate Co., Japan’s biggest developer by market value, last year announced two warehouse projects with partners in Tokyo Bay and Kanagawa prefecture.
The vacancy rate for warehouses in the Tokyo metropolitan area fell for four straight quarters to 3.6 percent as of June 30, according to Los Angeles-based CBRE. Industrial spaces returned 6.4 percent on average for the year ended August, more than double that for office buildings, according to London-based Investment Property Databank Ltd.