Digital Realty’s Japan JV Close to Big Land Deal in Tokyo Market

Digital Realty Trust and Mitsubishi’s Japanese data center joint venture is continuing to stockpile land for construction in the Tokyo data center market.

The JV, called Digital Realty MC, on Monday announced that it has signed an agreement to acquire a second plot of land in Inzai, a city east of Tokyo. The company expects to close the deal in the first quarter of 2020.

If closed as expected, the company will have two plots for what could one day become a sprawling Inzai data center campus. The 430,000-square foot plot is large enough to fit three planned facilities: 36MW, 30MW, and 18MW.

Digital didn’t say when it would build them, saying in the announcement that each would be “subject to customer demand.”

It’s uncommon for a data center provider to announce a land acquisition before closing the deal. The likely explanation for the move is Digital wanting to signal to one or more potential customers (and to the stock market) that it’s able to expand capacity in the tight Tokyo real estate market.

The plan is to interconnect all facilities on the Inzai campus, including the 38MW building planned for the first, 215,000-square foot Inzai site, whose purchase the company announced earlier this year.

San Francisco-based Digital Realty bought its first piece of land in Japan (in Osaka) in 2013 but didn’t build anything on the property until about three years later. In 2017, it announced launch of the first, 7.6MW building on the planned Osaka campus, leased to a single cloud provider, whose name it did not disclose. It announced a second large customer on the campus the same year.

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Later in 2017, it formed the 50-50 joint venture with Mitsubishi, contributing the Osaka campus. Mitsubishi contributed a data center in Mitaka.

When Digital and Mitsubishi first announced the venture they said they expected it to eventually manage assets worth more than 200 billion yen, which at the time converted to $1.76 billion.