(To read more on the industrial market, click here.)

TOKYO-If any place could use more storage space, it would be this archipelago, and not just by being the most land constrained and densely populated country of the industrialized world. According to a new report from ProLogis, numerous other factors have created Japan's vastly undersupplied warehouse/distribution network, one struggling to keep up with the resurgent economy but a sector ripe with opportunities for third-party developers to address the crisis.

"Looking ahead, Japan's logistics property network would appear to have substantial room for growth," according to the 20-page review, which was authored by Leonard Sahling of ProLogis and John Tofflemire, president of Sapient Real Estate Consulting in Tokyo. ProLogis is among a handful of firms that has built for-lease space in Japan, having completed 19 properties encompassing 10.5 million sf with another 5.7 million sf under way, all since its initial foray in 2002. The space is 100% leased, ProLogis says.

In the report, Sahling describes his firm beginning to research the Japanese for-lease market in 1999 only to find it was virtually non-existent. Due to arcane lease laws and the high value of real estate, most companies owned their distribution and warehouse facilities, researchers found. ProLogis could identify just one other private developer who had built distribution space to market for-lease prior to 2002, Sahling says, and the entity had only constructed two such projects, one in 1990.