Description
The Tokyo and Osaka data centre markets continue to grow and expand despite the inherent constraints and challenges in power infrastructure and high build costs. Hyperscale demand continues to be the dominant driver of capacity take-up, albeit from a less traditional group of hyperscale companies (more details in the full report), while local Japanese enterprise demand contributes as a steady source of demand. The key questions that the data and commentary within this report are attempting to answer: What are some of the early signs of AI infrastructure deployments in 2024-2025? Where were they located? And what are some of the key drivers that will see more AI inference and training workloads being deployed in Japan over the next five years? More importantly, how will this affect data center rental pricing over the next five years?
The Tokyo market was worth USD $4.3b in 2025 and is projected to grow 12% y/y to USD $4.8b in 2026. Osaka has shifted from a DR-oriented location to a core cloud region for a growing group of hyperscalers due to its central location in Japan and the ability to serve both Central and West Japan. The Osaka market was valued at USD $1b in 2025 and projected to grow 20% y/y to USD $1.2b in 2026. The projected five-year CAGR (2026-2030) for Tokyo and Osaka is 15% and 22% respectively.
Hyperscale cloud continues to be at the centre of all things related to data centres in Japan. The hyperscale-oriented portion of the market, currently 62% in Tokyo, is expected to account for 78% by 2030. Hyperscale colocation is expected to grow 15% y/y in 2026 and is expected to be the primary driver of growth in the Tokyo and Osaka markets. The five-year CAGR for hyperscale colocation in Tokyo is projected to come in at 19%. Osaka is seeing a similar story play out. Hyperscale will constitute 63% of the market this year and account for over 80% by 2030. Osaka’s hyperscale colocation market grew 26% y/y last year and is projected to grow 31% y/y this year with a forward-looking five-year CAGR of 46%.
This report is an excellent resource for any service provider, investor or enterprise end user looking to understand and project the data centre and interconnection market in Tokyo and Osaka or find a service provider.
Read the PDF preview HERE.
Executive Summary
EXECUTIVE SUMMARY
The Tokyo and Osaka data centre markets continue to grow and expand despite the inherent constraints and challenges in power infrastructure and high build costs. Hyperscale demand continues to be the dominant driver of capacity take-up, albeit from a less traditional group of hyperscale companies (more details in the full report), while local Japanese enterprise demand contributes as a steady source of demand. The key questions that the data and commentary within this report are attempting to answer: What are some of the early signs of AI infrastructure deployments in 2024-2025? Where were they located? And what are some of the key drivers that will see more AI inference and training workloads being deployed in Japan over the next five years? More importantly, how will this affect data center rental pricing over the next five years?
The Tokyo market was worth USD $4.3b in 2025 and is projected to grow 12% y/y to USD $4.8b in 2026. Osaka has shifted from a DR-oriented location to a core cloud region for a growing group of hyperscalers due to its central location in Japan and the ability to serve both Central and West Japan. The Osaka market was valued at USD $1b in 2025 and projected to grow 20% y/y to USD $1.2b in 2026. The projected five-year CAGR (2026-2030) for Tokyo and Osaka is 15% and 22% respectively.
Hyperscale cloud continues to be at the centre of all things related to data centres in Japan. The hyperscale-oriented portion of the market, currently 62% in Tokyo, is expected to account for 78% by 2030. Hyperscale colocation is expected to grow 15% y/y in 2026 and is expected to be the primary driver of growth in the Tokyo and Osaka markets. The five-year CAGR for hyperscale colocation in Tokyo is projected to come in at 19%. Osaka is seeing a similar story play out. Hyperscale will constitute 63% of the market this year and account for over 80% by 2030. Osaka’s hyperscale colocation market grew 26% y/y last year and is projected to grow 31% y/y this year with a forward-looking five-year CAGR of 46%.
The demand profile in Japan is healthy, and the majority of hyperscale platforms have opted to go with a leasing strategy for the lion’s share of their capacity requirements either through multi-tenant colocation leasing or dedicated built-to-suit data centres. The only exception to this is Amazon (AWS) and Google which operate their own self-build data centres in East Tokyo’s Inzai district and West Tokyo’ Sagamihara district today. Our previous report noted the impact of real estate developers altering the competitive fabric of both the Tokyo and Osaka markets and this has materialized in 2025 and is expected to be a new normal moving forward for the Japan market. Built-to-suit data centre builds by both colocation providers and real estate developers are now a common theme in the Japan market and this is expected to continue over the next five years as campus sizes get larger and larger.
On the enterprise side, which is increasingly becoming a more underserved part of the market as most providers have pivoted heavily to serve larger hyperscale cloud and AI requirements, is continuing to see steady demand. Interconnectionfocused providers have had a distinct advantage as enterprise customers have migrated more workloads to cloud and mostly settled on some kind of hybrid architecture.
Japan demonstrates all of the obvious positive demographic characteristics and it is not likely a domestic cloud will be built to offset adoption of major public cloud platforms originating from the US. Enterprise adoption of cloud appears to have reached an inflection point and is now accelerating.
Of course, there are challenges. The most concerning are the ones around how that translates to build costs. There is a multi-year backlog and ongoing delays in power substation infrastructure build-outs, combined with labour shortage issues in the Japan market. This has caused a spike in construction costs and resulted in longer time frames for bringing new data centres builds online.
This report is an excellent resource for any service provider, investor or enterprise end user looking to understand and project the data centre and interconnection market in Tokyo and Osaka or find a service provide
Download PDF preview
Read the PDF report preview HERE
