The Japanese arm of logistics investment company GLP will invest 1 trillion yen (US$8.7 billion) in facilities across the nation, capitalizing on a rise in demand as the coronavirus pandemic has fueled a surge in e-commerce.
A fund launched by GLP to pursue this effort recently closed with 412 billion yen in capital commitments, mainly from pension funds and sovereign wealth funds in North America, Asia and the Middle East. With borrowing, the fund’s assets under management will rise to more than 1 trillion yen — enough to build almost 50 large-scale multi-tenant logistics centers.
This “represents the largest ever amount of capital raised for a Japan-focused private real estate strategy,” according to GLP.
The business-to-consumer e-commerce market for merchandise jumped 22 percent to 12.23 trillion yen in 2020, according to the Ministry of Economy, Trade and Industry — much faster than the five-year average of 8 percent — as more people shopped from home amid the pandemic.
With central banks around the world moving to tighten monetary policy, overseas investors see the potential for higher investment returns in Japan, where interest rates remain relatively low. There is keen interest in logistics facilities, which have a better medium- to long-term growth outlook than shopping centers and hotels that have been hit hard by the coronavirus.
GLP has worked on logistics centers in the greater Tokyo region, such as GLP Alfalink Nagareyama in Chiba Prefecture, and looks to expand its scope nationwide over the next two to three years.
The company will open up facilities to nearby residents, aiming to make them a centerpiece of local communities. It plans to add amenities like cafes and childcare centers while encouraging tenants to trade information.
Players in the sector are competing to add value in unique ways. Tokyu Land has begun offering recruiting support services to tenants at logistics facilities.
Rental space at large logistics facilities in Japan’s four big urban areas is expected to grow next year to 10 times 2007 levels in terms of floor space, while the vacancy rate is projected to rise to almost 6 percent as demand slackens, according to logistics services firm CBRE.
