ESR Group Limited, a Hong Kong-based real asset owner and manager, has broken ground on ESR Kawanishi Distribution Center 3 (ESR Kawanishi DC3), the third building and the final ready-built facility of its integrated full-service ESR Kawanishi Distribution and Techno Park (ESR Kawanishi) in Osaka, Japan.

ESR said in a statement on Wednesday that at nine storeys and with a gross floor area of 433,000 square metres, ESR Kawanishi DC3 is the group’s largest asset and among the largest logistics facilities developed in Japan with third-party institutional capital.

ESR brought together 14 leading domestic investors, alongside a long-standing European capital partner, to raise circa $245 million to fund the circa $1 billion development.

Rezoned by the ESR urban planning team in collaboration with Kawanishi City to facilitate sustainable economic development, ESR Kawanishi has a land area of around 50 hectares and will serve as the blueprint for full-service, modern large-scale logistics assets.

“ESR Kawanishi is the most accomplished realization of ESR’s product vision in Japan to date,

“Customer demand is markedly higher for logistics space in large-scale park developments and is set to grow even further with the current re-onshoring of manufacturing activity,” said Stuart Gibson, ESR Group Co-founder and Co-Chief Executive Officer.

According to him, this underpins ESR’s differentiated investment thesis based on accelerating rental growth.

“Given the dearth of suitable zoned land, the strategic decision we made years ago to form an in-house team dedicated to land sourcing and rezoning enables us to offer our capital partners access to such investment opportunities,” he added.

Pierre-Alexandre Humblot, Managing Director, Fund Management and Capital, ESR, pointed to strong investor confidence in this landmark project as shown in the majority participation by Japanese capital partners in equity funding for ESR Kawanishi DC3. Mr.

“Repeat involvement of domestic investors will make ESR’s project funding more resilient. It will also bring our foreign investment partners privileged market and governance insights that position them ideally to capitalize on the unique opportunities offered by the Japanese private assets market,” he added.

Space in the park’s first two buildings – ESR Kawanishi DC1 and ESR Kawanishi DC2 – has been leased by logistics companies that deliver both wide-area and last-mile logistics solutions for customers in western Japan as well as from central and northern Osaka to Kobe City and the Hanshin region.

ESR Kawanishi’s last land parcel will cater to build-to-suit uses, including specialized hazardous materials facilities, manufacturing, and automated high-bay warehousing.

In addition, consistent with the group’s sustainability and decarbonization agenda, ESR Kawanishi has a provision to feature a large-scale Battery Energy Storage System project.

Highlighting the collaboration with Kawanishi City on the strategic rezoning of land, Satoshi Takeda, Managing Director, Development, ESR Japan, said the firm’s commitment to uplift its communities guides its approach to taking long-term minority stakes in large strategic land parcels to maximize their potential and value.

“Over the last four years, we have been engaging with landowners to assist in the rezoning of land and to advance our shared goal of driving economic growth for local communities with a clear roadmap for sustainable development,” he added.

Reflecting ESR’s human centric philosophy, ESR Kawanishi will offer amenities such as ‘R:KIDS’, a complimentary daycare center that aims to support women returning to the workforce, as well as exclusive rest areas for drivers and ample parking space.

Closer to full park completion, hospitality and retail offerings will be considered to provide greater convenience for customers and their employees.

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