US developer Hines on Tuesday announced its first logistics acquisition and development in Japan, a two-building project in the port city of Nagoya, to be called the Yatomi Distribution Center.
The project in Nagoya’s Yatomi city, consists of an existing single-storey warehouse with 25,000 square metres (269,098 square feet) of space and a development site where the Houston-based firm will construct a four-storey logistics building totalling 225,000 square metres. Groundbreaking on the project, which will target a LEED Silver sustainability certification, is expected in the second quarter, Hines said in a release.
“Our logistics customers are changing their approach to site selection, placing a stronger emphasis on ensuring their facilities are on the leading edge of sustainability initiatives to attract labour,” said Drew Huffman, managing director at Hines. “We hope to exceed those demands while also providing market-leading clear heights, floor loads and layout flexibility to address our users’ core business focus — moving goods quickly and efficiently.”
The project, which is not to be confused with the ESR Yatomi Distribution Center in the same area, is located near Japan’s largest and busiest port and is the second-ever acquisition in the country for Hines, after the firm picked up a Yokohama office tower last November on behalf of its flagship pan-Asian fund.
The two buildings at Yatomi Distribution Center will serve both ambient and cold storage users, including last-mile logistics providers and regional distributors. The new building will provide up to 6.5 metre (21.3 foot) clear heights, floor loads exceeding two tonnes and truck access to all levels of the building, while the existing building has clear heights of over 10 metres and dual-sided loading — a rare feature in the Japan logistics market, Hines said.
The new development will offer a three-storey amenity area with indoor and outdoor eating areas, break rooms, business lounges, conference rooms and showers. Green elements will include renewable on-site power generation, water reclamation and optimised energy performance of mechanical, electrical and plumbing systems throughout the facility.
Earlier market reports had indicated that IKEA had sold a distribution centre in Yatomi last year, with that asset also including undeveloped land with potential for further development, however, Mingtiandi was unable to verify whether Hines new acquisition is that property at 2-1 Ueno Cho in the city.
Japan’s e-commerce sales grew by 21.7 percent year-on-year in the second half of 2021 to reach a penetration ratio of 8.1 percent, Cushman & Wakefield said last month in its Logistics MarketBeat report. Food and beverage penetration remains low at 3.3 percent as Japanese continue to rely on neighbourhood stores, but Cushman forecasts continued demand for logistics space driven by the online sector.
“Japan’s logistics market is an attractive investment target for Hines’s continued expansion in Asia Pacific,” said Jon Tanaka, who was appointed as the firm’s first country head in Japan last October. “As much of the existing stock is obsolete and e-commerce growth has been strong, Hines anticipates continued demand growth, particularly for next-generation ESG-oriented facilities. We look forward to continuing to expand this product offering in the region.”
Spreading Out in APAC
Yatomi Distribution Center is the fifth new logistics investment in a little over a year for Hines in Asia Pacific, where in January the firm announced the development of a new logistics centre south of Seoul. The company also broke ground on the Namyang Logistics Center in nearby Hwaseong in the fourth quarter of 2021.
The South Korean projects came about after Hines in 2020 joined forces with Metropolitan Real Estate Equity Management — then owned by Carlyle Group and now part of BentallGreenOak — to acquire a cold storage facility and adjacent development site in Guangdong province as the developer’s first logistics project in China.
In addition to that trio of developments, Hines has acknowledged a fourth APAC logistics investment in the past year but has yet to provide details publicly.
Privately-held Hines has invested nearly $4.1 billion in the logistics and industrial sector worldwide, completing over 60 acquisitions totalling more than 43 million square feet (4 million square metres). The firm has a further 36 development projects ranging from the design stage to completed, representing an additional 25 million square feet.