ESR to develop US$1.5 billion multi-phase logistics park Osaka Japan

ESR Cayman Limited (“ESR” or the “Company”, together with its subsidiaries as a “Group”; stock code SEHK: 1821), APAC’s largest real estate asset manager powered by the new economy, announced its latest multi-phase logistics development in Greater Osaka, construction of the ESR Kawanishi Distribution Center (“ESR Kawanishi DC”) on a prime site of 505,647 m² (152,958 tsubo) in the Japanese city of Kawanishi to further expand its network strategic institutional quality new economy real estate in the metropolitan area.

ESR Kawanishi DC is a two-phase development located in Kawanishi City’s eastern Hyogo Prefecture, in the heart of Greater Osaka’s inland logistics market. Phase 1 will consist of two six-story multi-tenant facilities with a GFA of 99,051 m² (29,963 tsubo) and 98,746 m² (29,871 tsubo), respectively. The facilities, which are designed to achieve CASBEE A rating and the highest standards for building specifications, will include a host of sustainability and energy-saving features to minimize environmental footprints. Phase 1 is expected to start in July 2023 and end in December 2024, while the two Phase 2 buildings will begin construction from 2025.

Stuart Gibson, co-founder and co-CEO of ESR, said: “Given the scale, complexity and location of the development, ESR Kawanishi DC represents one of the largest and most significant urban rezoning projects in recent years, strategically repurposing a prime residential site order for logistics and industrial purposes. This is a vast master plan that will help meet the growing demand for state-of-the-art, large-scale logistics space in Greater Osaka, while enabling the region to strengthen its position as a global logistics hub 1. This development also unlocks the full potential value of the site and benefits the long-term development of the region by promoting employment opportunities, taxable income and therefore economic growth.

Greater Osaka’s logistics sector continues to demonstrate its strength, propelled by key forces such as the continued rise of e-commerce, the automation of logistics operations and the transformation of In the second half of 2021, the Greater Osaka area has recorded the lowest vacancy rate since 2017 at mid-1.0% and the average rent rose 0.8% year-on-year, driven by rental growth in Osaka

Domestic growth of 2.3% year-on-year1. The award-winning 388,570 sqm ESR Amagasaki distribution center, which is conveniently located in the Greater Osaka metropolitan area, boasts a GAV of over US$1.0 billion and is now 98% leased to a portfolio of diversified rents from 16 tenants, including leading e-commerce companies since its completion in June 2020. This historic facility represented one of the seed assets of the ESR Japan Income Fund, which completed its first closing in October 2021 and has been endowed with initial equity commitments of US$750 million from some of the world’s largest institutional investors. .

ESR has consolidated its position as the undisputed leader in this highly strategic Greater Osaka market. A leader and pioneer in new economy real estate in Japan, ESR has unparalleled experience in urban planning and rezoning projects. The Group has also developed some of the most advanced facilities that set new benchmarks for modern logistics infrastructure while protecting and celebrating the heritage of local communities and the surrounding environment.

This rezoning project in the town of Kawanishi is the latest in a long series of land use changes that ESR has undertaken over the past decade. ESR attaches great importance to urban planning and has created a dedicated team specializing in land rezoning.

“Rezoning is time consuming and requires a very detailed understanding of every step of the long process. Additionally, as planning laws can differ from prefecture to prefecture, early engagement with authorities at local and national levels is critical,” said Gibson. Local community engagement is also an essential part of the process. This plot of Kawanishi has been reviewed by many developers over the past 20 years, but the aspect of local community engagement has never been compelling enough to gain buy-in from the local community and the local economy. ESR will ensure that local contractors, suppliers, factory operators and vacant positions are filled with workers and businesses from nearby communities. Some past examples of rezoning and community engagement are shown below. Source: Japan Logistics Marketbeat Report H2 2021 by Cushman & Wakefield

ESR has spent years of effort working with Tokyo University of Science and the Kuki Mayor’s Office to transform the old university campus into a modern 151,501 m² facility, the ESR Kuki Distribution Center. Now a major distribution center serving Greater Tokyo’s significant logistics needs, the facility has created 1,500 full-time jobs for the local community. Additionally, part of the land was donated to the town of Kuki for community purposes.

The preservation of community and environmental heritage plays a key role in all CSR developments. During phases 1 and 2 of the 800,000 m² ESR Yokohama Sachiura logistics park, the Group brought life back to a neglected urban forest to protect the natural habitat of a diverse mix of flora and fauna, while an old crane portal will be retained and will be the centerpiece as an architectural icon of the facility and the community.

Mr. Gibson added: “Sustainability, technology and innovation are shaping the future of new economy real estate. We leverage our experiences and expertise to go above and beyond to provide world-class facilities not only for our customers and the logistics market, but also for the local communities in which we operate. Through the creation and operation of premier properties like ESR Kawanishi DC and our other flagship developments in Yokohama Sachiura, Kuki, Fujiidera, Amagasaki, to name a few, we are proud to be able to bring a meaningful contribution and positive impact for the people and communities we connect with.

ESR has become APAC’s largest real estate asset manager powered by the new economy and the world’s third largest listed real estate investment manager with gross assets under management of US$140 billion2 following its recent acquisition of ‘ARA Asset Management. As the leading new economy real estate platform, dominating the APAC region with $59 billion in assets under management3,

ESR continues to enrich its offers of property development products and investment solutions with high growth potential.

ESR to develop a $1.5 billion multi-phase logistics park on a 505,647 sqm site in Greater Osaka Unveiling one of the largest and most significant urban rezoning developments to meet the continued expansion of the Japan in the new economy real estate focused on e-commerce.