In 2022, Munekazu and Erin Tanikawa moved into a new apartment in a Tokyo commuter town, expecting a quiet view from their balcony. Four months later, a corporate vehicle backed by Canada's CPP Investments, US asset manager Fidelity, and Japanese trading house Mitsui & Co. bought the parking lot directly below them. The plan: a 52-metre-tall data centre, the kind of warehouse-scale building that powers modern AI. Their ¥50mn (about $312,000) apartment has since lost roughly a quarter of its value, and the couple has joined more than 13,000 neighbours in petitioning against the project. They have also filed a lawsuit against the entity that approved it.
Their story is not unusual in Japan. The country has roughly 300 data centres, and JLL, a real-estate firm, expects the $23bn market to grow nearly 50% by 2030 — with 90% of sites concentrated in Greater Tokyo and Osaka. Prime Minister Sanae Takaichi has placed AI at the centre of her economic growth strategy, which analysts say will accelerate the boom further. One lawyer representing residents calls it 'the AI gold rush.' But here's the catch: Japan, unlike the US and parts of Europe where similar disputes mostly affect rural communities, is seeing the backlash erupt in residential and commercial heartland — a difference that experts trace to two distinctive features of Japanese urbanism.
First, planning rules. Japan's Building Standards Act treats data centres as office buildings rather than factories or warehouses, even though they generate industrial-scale heat, noise, and traffic, and store enormous quantities of backup-generator fuel. The Inzai facility is planned to hold 1.2 million tonnes of it. A Kyoto University urban-management professor argues that Japan's land-use codes, written in an earlier era, simply weren't designed to anticipate AI infrastructure. Even NTT Data, Japan's biggest data-centre operator, has acknowledged that modern facilities can no longer be reasonably equated with conventional offices and that regulatory overhaul is needed.
Second, incentives. Local authorities like Inzai City, which sits in Chiba prefecture, collect property taxes from data centres and the investors who own them — a major reason cash-strapped municipalities welcome deep-pocketed developers. An official at the land ministry has said there are no immediate plans to create a new building classification for data centres, suggesting local governments must instead use existing laws to limit unwanted projects. That leaves residents fighting case-by-case battles. The disputed Inzai facility is being developed by the UK's Colt Data Centre Services, near several other Colt sites, at least one of which Microsoft uses. After public protest, Inzai City asked Colt to halt the project and offered alternative land. Colt refused, citing efficiency from clustering with neighbouring centres, and Inzai City stated that under the rule of law it could not deny approval — while admitting the expansion had created 'major issues' for residents that current rules cannot adequately address.
Toshiyuki Takita, a member of the prefectural assembly for Chiba, posed the question that haunts the dispute: this may be the frontier of capitalism, he said, but is it really good for the area over the next 50 or 100 years? It is a question other countries will soon face too. AI's compute hunger is global, but the fight over where its physical infrastructure goes — and who pays the cost in heat, noise, and lost property value — is profoundly local.
Munekazu and Erin Tanikawa thought they bought a Tokyo-area dream apartment. Four months later, an investor consortium bought the parking lot below — to build a 52-metre data centre on it.
AI is so power-hungry and data-hungry that it needs warehouse-sized buildings full of servers — data centres — and Japan is suddenly one of the hottest markets on Earth for them. The country has roughly 300 data centres today, and the $23bn market is expected to grow nearly 50% by 2030, with 90% of sites packed into Greater Tokyo and Osaka.
The catch: Japan's planning rules treat data centres as offices, not as the loud, hot, fuel-storing industrial facilities they really are. So developers — backed by foreign pension funds and asset managers like Canada's CPP and US-based Fidelity — are building them right next to apartment blocks. In Inzai City, near Tokyo, residents have launched lawsuits and gathered 13,000+ signatures trying to stop one going up under their balconies.
The fight isn't really about one building. It's about what happens when a 21st-century industrial boom slams into a 20th-century rulebook.
Every chatbot answer, every AI-generated image, every TikTok recommendation runs through a data centre somewhere. The infrastructure powering tools you use daily has to physically exist — and increasingly it's being built next to people's homes, not on remote industrial estates. As you start thinking about where to live, work, or invest, 'is there a hyperscale data centre planned next door?' is becoming a real question, the way 'is there a highway expansion?' was for your grandparents.
Prime Minister Sanae Takaichi has put AI at the centre of Japan's economic strategy, which guarantees more of these fights, not fewer. Watch for two second-order effects: a rewrite of Japan's Building Standards Act to give data centres their own category, and a global pattern in which AI infrastructure becomes the next NIMBY battleground — the way wind turbines and oil pipelines were before it. As one local politician asked, this may be the frontier of capitalism, but is it really good for an area over the next 50 to 100 years?