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Technology

Mitsubishi Estate makes $2bn push into US data centers

Japanese developer plans open-ended fund in US to gain foothold in growing field

Tech giants like Google, Facebook and Apple continue to drive demand for data centers, creating an opening for Mitsubishi Estate and other developers.   © Getty Images

TOKYO -- Mitsubishi Estate aims to build seven U.S. data centers near Washington by around the end of the decade at an estimated cost of 200 billion yen ($1.83 billion).

The Japanese developer sees data centers as a prime growth business considering the increasing demand from tech giants like Google and Apple. Mitsubishi Estate will construct the first two centers by February 2024 in a joint investment with equipment leaser Tokyo Century.

Operation of the centers will be handled by the businesses that lease the sites. Mitsubishi Estate will become the first Japanese real estate company to invest in a U.S. data center business.

The seven data centers are planned for northern Virginia, among the first areas to benefit from a fiber-optic network developed by the U.S. government. Northern Virginia also experiences few earthquakes or other natural disasters, a factor contributing to the region becoming a global hub for data centers.

Mitsubishi Estate will create an open-ended fund in the U.S. dedicated to data centers in about two or three years. The vehicle will draw capital worldwide to fund the construction of the remaining facilities, as well as other pursuits.

The American data center market has doubled during the past four years in terms of electricity consumption, U.S. real estate services firm CBRE says. The market is expected to climb by another 14% this year.

Data centers are projected to be the largest investment target in the next several years behind only fulfillment centers, which are expanding on e-commerce demand. Japan also offers strong opportunities for constructing data centers. Daiwa House Industry is developing a massive complex in Chiba Prefecture near Tokyo. Mitsubishi Estate is considering building data centers in Japan as well.

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