- The data center construction industry in Japan is facing severe pressure due to labor shortages, soaring costs, and outdated building processes, causing delays in the government’s AI infrastructure development plan.
- According to Tsubasa Suruga (Nikkei Asia, 12/03/2025), investors from the US, Singapore, and Australia are flocking to secure land for data center construction in Tokyo and Osaka. However, many projects cannot proceed because they cannot find contractors, while major construction companies like Kajima, Taisei, and Obayashi are fully booked until after 2028.
- Japan currently faces two main issues: (1) a shortage of highly skilled workers, and (2) slow adoption of Building Information Modeling (BIM) – a 3D digital design model that helps shorten approval and construction times. In Singapore, BIM has been mandatory since 2015, helping complete a 50 MW center in 2 years; in Japan, the same scale takes almost 4 years.
- Construction costs are skyrocketing: Tokyo is now the world’s most expensive market for data centers, with costs rising 38% from 2020–2025, and data center components alone increasing by 2.5 times. The weak Yen further increases the price of imported cooling equipment and servers.
- According to DC Byte, Japan’s data center capacity reached 6.8 GW (269 facilities), triple the capacity from 5 years ago. However, 93% of the capacity in Tokyo is already utilized, and nearly 50% of future projects are pre-leased, making the market extremely scarce.
- Demand from China has surged after the US restricted chip exports to Chinese tech companies. Many Chinese enterprises are shifting to leasing infrastructure in Japan, although Japanese operators remain cautious due to economic security concerns.
- Construction timelines are prolonged: from an average of 2 years before 2020 to 3 years or more, making it difficult to predict the rapidly changing demand for AI hardware (Nvidia GPUs).
- To overcome the bottleneck, KDDI and SoftBank are converting old factories and industrial sites into AI data centers. KDDI acquired a Sharp factory in Osaka in April 2025 and will open an AI-ready center in January 2026, just 9 months later. SoftBank is implementing a 700,000 m² project in Hokkaido using a modular container model, allowing for quick assembly and flexible expansion.
📌 Summary: The data center construction industry in Japan is facing severe pressure due to labor shortages, soaring costs, and outdated building processes, causing delays in the government’s AI infrastructure development plan. Japan currently faces two main issues: (1) a shortage of highly skilled workers, and (2) slow adoption of Building Information Modeling (BIM), which helps shorten approval and construction times. In Singapore, BIM has been mandatory since 2015, helping complete a 50 MW center in 2 years; in Japan, the same scale takes almost 4 years.
