Can Global Logistics Properties sustain demand from its Japan market?

It’s bagged two projects thus far in the year.

Global Logistics Properties (GLP) is enjoying firm demand in Japan as it continues to ink back-to-back agreements.

According to OCBC, GLP management indicates that domestic consumption in its key Japanese market—GLP’s second largest market behind China, and constitutes 23% of GLP’s NAV—remains healthy and that the group continues to see demand for its facilities as customers look to consolidate their operations within well-located facilities.

GLP recently announced it has inked a 15,000 sqm lease with Akachan House at GLP Narita in Greater Tokyo. Akachan House, an e-commerce retailer for baby products in Japan, will be consolidating its multiple operations in Greater Tokyo into GLP Narita, which will be used as a hub to support its same-day distribution needs.

Further, GLP announced last month that it established a 50:50 joint venture, GLP Japan Development Venture II (GLP JDV II), with the Canada Pension Plan Investment Board (CPPIB).

This is the second venture set up by the two groups after GLP Japan Development Venture I, which was launched in september 2011 and has since reached 92% of its investment capacity with US$2.4b of projects in various stages of development.

GLP JDV II will initially be set up with total equity commitments of JPY100b, and its AUM is seen to climb to US$2b over the next three years. It is expected to begin construction of new projects this year and its investment strategy allows for the entity to sell assets to GLP J-REIT, which will provide higher flexibility and increased returns.

GLP JDV II will also be seeded with GLP Nagareyama, a large-scale logistics park in Greater Tokyo with 319k sqm of total GFA, which will be constructed in phases at a total investment cost of JPY59b.