U.S. data center REIT launches Japanese data center JV

Digital Realty Trust has formed a partnership with Mitsubishi Corp. to create a data center provider in Japan.

The 50/50 venture, MC Digital Realty, is using the two companies’ existing properties in two Japanese markets as seed assets: Digital Realty’s existing Saito facility in Osaka and Mitsubishi Corp.’s Mitaka facility in Tokyo. It will provide data center space, power and interconnection services.

MC Digital Realty will start with initial capital of more than 400 million yen ($351 million), aiming to manage more than 200 billion yen ($1.8 billion) of assets by 2022.

Currently, Japanese companies predominantly use on-premises corporate data centers. MC Digital Realty believes Japan will follow the United States and Europe by shifting to high-capacity facilities operated by third-parties.

“Japan is a developed market, with a highly advanced technology sector that is expected to experience rapid growth over the next several years, yet the local data center market remains highly fragmented with a shortage of institutional-quality data center capacity,” said Chris Kenney, Digital Realty’s senior vice president, international. “We see tremendous opportunity for growth in the Asia Pacific region over the next several years, and we expect the MC Digital Realty joint venture will significantly enhance our ability to meet the growing data center demands of the Japanese market.”

The portion of corporate IT still housed in companies’ own data centers is much higher in Japan than it is in mature North American and European markets.

Earlier this year, Digital Realty announced the opening of its first data center project in Japan, Digital Osaka 1, which covers about 93,000 square feet, provides 7.6 megawatts of IT capacity, and was fully leased before the official opening. Digital Realty also announced it acquired an adjacent land parcel for the future development of an Osaka connected campus, which will support up to 27 megawatts of further IT capacity.