ESR Launches JV With CloudHQ to Complete $2B Osaka Data Centre Campus

Cosmosquare’s OS1 data centre in Osaka is scheduled to enter service in June (Image: ESR)

ESR has brought in a partner to help get its Osaka data centre campus to the finish line, teaming with US builder CloudHQ on the $2 billion Cosmosquare project.

The companies will jointly build, fit out and operate Cosmosquare to deliver 130 megawatts of data centre capacity in three phases, Hong Kong-listed ESR said Thursday in a release. San Francisco-based CloudHQ has developed 12 hyperscale data centres totalling 1.1 gigawatts worldwide.

ESR completed the core and shell of Cosmosquare’s first phase, OS1, last August and plans to open the 25MW facility for service in June after the full fit-out. No timeline was given for the complex’s latter phases.

“ESR Cosmosquare is a flagship project for ESR, and we are delighted to be working with CloudHQ to tap the immense data centre growth opportunities that exist in Japan,” said ESR co-founder and co-CEO Stuart Gibson. “ESR has one of the largest real estate development teams in APAC, which enables us to leverage local market supply chain solutions and partnerships to deliver data centres on spec, on time, and on budget for the benefit of our data centre partners.”

Veteran Partner
Cosmosquare sits in Osaka’s seaside Nanko Kita precinct, within 10 kilometres (6.2 miles) of key internet and telecom exchanges in the city’s central business district. The campus is backed by ESR’s first-ever data centre fund, which achieved a $1 billion first closing in 2022 and subsequently grew to $1.35 billion.

ESR co-founder and co-CEO Stuart Gibson

Designed with an efficient cooling system to minimise the need for chillers and reduce energy use, OS1 is seeking LEED NC v4 Gold certification. ESR hopes to achieve 100 percent renewable electricity use at all its data centre assets by 2040 after reaching an interim target of 75 percent by 2030.

CloudHQ is led by industry veteran Hossein Fateh, the co-founder and CEO of Dupont Fabros Technology, a data centre REIT acquired by Digital Realty in 2017 for $7.8 billion. Since its founding in 2016, CloudHQ has completed more than $10 billion in projects.

“ESR’s deep local real estate knowledge combined with CloudHQ’s engineering expertise will make this a powerful partnership going forward,” Fateh said. “This joint venture will enable us to better serve our clients in Japan and across the Asia Pacific region, ensuring they have access to the highest quality data centre infrastructure and services.”

Accelerated Strategy
Cosmosquare is part of Warburg Pincus-backed ESR’s accelerated strategy to execute 575MW of committed data centre sites across key Asia Pacific markets. Last May, the group announced the groundbreaking of its fourth data centre location in Japan, a 60MW facility in Tokyo’s eastern Koto ward, boosting the company’s pipeline of projects in the country to 320MW.

“We have a strong conviction in the growth of the data centre market in Japan and across APAC,” said ESR data centre CEO Diarmid Massey. “Our pipeline continues to develop in all APAC markets as we focus our business on developing world-class solutions and campuses for partners in Japan, South Korea, Australia and India with the backing of our operating and capital partners.”

The data centre update comes after a consortium of investment firms including Starwood Capital, Sixth Street Partners, SSW Partners, the Qatar Investment Authority and Warburg Pincus announced a binding offer last month to buy out ESR in a deal valuing the developer and fund manager at nearly $7.1 billion.