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Lease Office Market Trends in Tokyo 2013 (The first half)

Post: Sunday June 23, 2013

The lease office market in Tokyo is recovering. The rent prices are on upward trends for new office buildings. The trends also show a declining vacancy rate and an increase in demand. The popularity for buildings with up-dated facilities and a good location tend to be quite high.

 

In 2012, the total new square meter’s of office space entering the market in the 5 wards of central Tokyo (Chiyoda, Chuo, Minato, Shinjuku, Shibuya) was around 1,600 thousand square meters. This is a level not reached since the year 2003. The estimated new supply of office space for 2013 is forecasted at about 800 thousand square meters; about half of 2012. After the completion of the large scale buildings: Kabukiza Tower and Tokyo Square Garden in February and March there are no more new large scale projects planned for completion in 2013. Office vacancy has declined to 8.56% in the end of March, the lowest it’s been in 3 years. This decline in vacancy rate and an upward trend on rent prices are expected to continue though the year 2013.

 

DSC08893 ビル群_RGBのコピー DSC08878

 

Inquiries from companies looking for office space have increased since the beginning of this year, especially inquiries about new large scale office buildings constructed within the last few years. The continuing downward trend on prices after Lehman's bankruptcy seems to have hit a bottom. And with the expectations of a better economy around the corner, many companies are motivated for a relocation.

The major reasons behind moving inquiries are

1) Preparing for an increase of employees and business expansion,

2) Increasing demand for office buildings with up-dated earthquake-resistance and business continuity capabilities

   due to the Great East Japan Earthquake,

3) Relocation and consolidation of multiple office locations for cost-cutting purposes.

There are also cases of existing tenants increasing their office space within their own building.

 

There are two prospective outlooks for the near-term future of the office lease market in Tokyo. Due to the massive increase of new office space in 2012, older buildings or buildings not in good areas might find it much harder to find prospective tenants due to a lack of competitiveness. Newer, more competitive properties are starting to decrease the perks given to prospective tenants; such as less free rent period at the start of the lease. Older, less competitive properties need to rely on price effectiveness, and more perks to lure tenants. Some owner’s of these properties are giving up to 12 months free rent in order to fill their properties.

 

New supply of office space is forecasted to decrease through out 2013 and the year after. Office property supply increased drastically last year and the next large scale increase in supply is expected only after 2017. Analysts foresee that if current economic trends continue, it will lead to an increase in demand, and with no new large scale supply in the near future, rent prices may also increase further.

 

 

Research for Office Rent (NIKKEI Newspaper May 04, 2013) 

Area Group

 

Rent

1000Yen/Tsubo

Rent

(in 2012)

Deposit

1000Yen/Tsubo

Marunouchi, Otemachi

New

4055

50

480660

Exist.

2360

2360

148720

Kasumigaseki, Uchisaiwaicho

New

Exist.

1040

1135

100480

Yotsuya, Kojimachi

New

1925

21.522

30300

Exist.

830

630

38336

Yaesu,Kyobashi, Nihonbashi

New

2240

3035

264480

Exist.

830

830

48360

Nihonbasi-Honcho, Muromachi

New

Exist.

625

621

42300

Ginza

New

3335

2527

396420

Exist.

835

1035

32420

Hachobori, Kayabacho

New

14

140

Exist.

723

720

30276

Tukiji, Akashi-cho

New

25

Exist.

630

625

44360

Shinbashi,Nishi-Shinbashi,

Toranomon, Shiodome

New

2327

2435

276324

Exist.

738

735

48456

Akasaka, Aoyama

New

3540

2830

420480

Exist.

740

737

28480

Roppongi, Azabu

New

35

420

Exist.

742

840

28504

Shiba, Mita, Takanawa

New

2225

264300

Exist.

730

830

42360

Shibaura, Konan

New

2023

2223

230240

Exist.

630

630

35360

Osaki, Gotanda

New

20

Exist.

630

630

42360

Shibuya, Harajuku

New

35

420

Exist.

935

930

45420

* 1 Tsubo=3.3sqm

 

This entry was posted in Rental Offce

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