Pan-Asian logistics group ESR has acquired a parcel of land on Tokyo Bay to be developed into a billion-dollar distribution centre.

ESR’s Redwood Japan Logistics Fund 2, along with investment partners including Sam Zell’s Equity International (EI) and a major US pension fund, are backing the project, to be known as ESR Yokohama Distribution Centre.

ESR said the project in the southern part of Yokohama, Kanagawa Prefecture will represent a total investment of over US$1bn (€890.3m) in the first phase and will initially comprise two modern, four-storey building with a total gross floor area of 393,226sqm.

The site has a total buildable area of more than 700,000sqm which would make it one of the largest multi-phased logistics parks currently under development in Japan in both size and value.

Stuart Gibson and Charles de Portes, ESR co-CEO and president respectively, said low vacancy and continued strong demand coupled with the constrained supply of premium space around Tokyo Bay made this Yokohama site a rare opportunity.

They said the site was well positioned to be one of the most valuable investments in ESR’s Japan pipeline.

Tom Heneghan, CEO of Equity International, said his firm and one of its major US institutional investor relationships regarded this project as “visionary”.

“We have a long history with ESR and its founders, particularly in Japan. The company has been a proven pioneer in developing modern logistics facilities in the country for more than a decade,” said Heneghan.

This is the second major transaction for ESR in Japan this year. In January, ESR partnered AXA Investment Managers – Real Assets and a major sovereign wealth fund to acquire six logistics properties located in Tokyo and Osaka for US$1bn.