Guide to Leasing Office Space in Tokyo
For most non-Japanese people, especially those new to Japan, searching for office space in Tokyo can be an uncomfortable and time-consuming experience. Lease negotiations can falter or fall apart due to the lack of a basic understanding of local office leasing practices.
"I did not expect searching for office space in Japan could be such an exhausting experience," "I do not want to do it ever again"...as seen in these comments; local rental practices in Tokyo can be quite complicated and varied, more so than in most other countries. This page explains some of the basics for office rental in Tokyo, and answers some of the most frequently asked questions by our non-Japanese clients.
Choose the neighborhood that is right for your business.
Perhaps the most important in deciding where your office will be. It is important to consider the many necessities and to prioritize. Here are some fundamentals to consider: accessibility to clients, proximity to major hub stations and airports (Narita and Haneda), walking distance to the nearest station, employees' commuting time and fees, rush hour traffic on the specific train line, proximity to banks, a post office, nearby dining options, etc. All of these factors will affect the smooth operation of you business in different ways.
Major business districts in central Tokyo
Area distribution by business type in central Tokyo
|Finances||Otemachi, Marunouchi and Nihonbashi|
|Lawyers||Kasumigaseki and Toranomon|
|Consulting||Roppongi and Marunouchi|
|Apparels||Omotesando and Aoyama|
|IT||Shibuya and Roppongi|
Type of Office Leasing
Ranging from furnished small cubicle style rental offices with shared meeting rooms and facilities - to high-end office buildings with bilingual secretary services in central locations. Generally, these properties are available for short-term contracts and it enables saving on initial investment costs for interior layout construction and office infrastructure setup.
These properties are recommended for companies:
- seeking a short-term rental property
- in the process of establishing or setting-up businesses for the company
- seeking small-scale offices for networking, wishing to outsource reception work
- when number of employees and size of business are fluctuating
- seeking a temporal office for a project
- seeking a space for recruiting interviews
Ordinary Office Space
Recommended for companies seeking a more consistent and long-term business base.
The size of such office ranges from 30 sqm. to over 3,500 sqm. From small sections within a building up to an entire building.
The conditions, form and term of an agreement vary depending on the owner and the size of a property.
When deciding on an office space, some of the aspects to consider are:
- Other occupants (any signs of crime syndicates, troublemakers, etc.)
- Size and impression of the entrance
- Quality of services and scale of the management company (management of common
areas, toilets, staff kitchens, etc. cleanliness of the property)
- Financial condition of the owner
- Efforts for earthquake resistance, capability to continue business under emergency situations (availability of back-up power generators, etc.)
- Availability of a smoking room (shared smoking space)
- Disaster planning and evacuation route
- Number of phone lines and network environment
- Type of A/C, available hours, extra fees for A/C use outside of the pre-determined A/C operation hours
- Height of the ceiling (Old Japanese buildings often have low ceilings; which is not suitable
or practical for Westerners.)
- Shape of the property (Shape of the space, placement of pillars, etc.)
- Business hours of the building (availability at night, weekends and holidays, etc.)
- Restriction on interior decorating/construction venders
Understanding the Lease
- Security Deposit (Shikikin, Hoshokin) Refundable payment to Lessor to conclude a lease contract. After the deduction of 'Restoration Fee', 'Fixed Amortization Fee' (if applicable) and a general cleaning fee, it will be repaid to Lessee, usually within 3 weeks to 1 month after vacating the property.
Market Average :
For small to mid-size office ; 4-8 times monthly rent
For mid-size office or larger size office; 6-18 times monthly rent
- Fixed Amortization Fee (Shoukyakuhi) Non-refundable payment to lessor, usually deducted from the security deposit when vacating an office.
Market Average : 0-2 times the rent.
- Renewal Fee (Koushinryou) Non-refundable payment to lessor, usually payable upon renewing a lease term.
Market Average : 0-2 times the rent.
- Rent Usually expressed in both tsubo (3.3 sq.m.) and sq.m. bases. Please check whether or not the nominal rent includes the management fee.
- TSUBO (Unique unit basis for area measurement) 1 tsubo is equal about 3.3 square meters, and the rental rate for office space is usually expressed in a per tsubo basis in Japan. Adapting to the tsubo measure may enable you to understand the Lessors' leasing logic better, since profitability is usually calculated on a per-tsubo basis. 1 tsubo equals twice the size of 1 traditional tatami mat.
- Management Fee (Kanrihi) Usually insisted for covering monthly expenses of utility and cleaning for public spaces and elevators.
Unlike the nominal rent, most management fees are hardly negotiable to decrease or waive.
- Free Rent Term A period that a Lessor agrees to lease an office space free of rent. In case the rent consists of a combination of a nominal rent and management fee, a standard definition of 'free rent term' excludes the nomal rent part only, and the Lessee is still liable for the management fee throughout the term.
- Sales Tax (Shouhizei) Excluding organizations such as embassies, consulate offices or other public or military service offices of foreign countries, all other office lessees need to pay sales tax on rent, management fees, fixed amortization fees, key money and renewal fees. The current tax rate is 5%.
Type of Lease Agreement (Contract)
- Normal Rental Agreement (Renewable): Usually 2-year contract. Sometimes a renewal fee is charged at the time of agreement renewal.
- Fixed-Term Rental Agreement (Not renewable): The rental agreement terminates on the expiry date of the agreement. The agreement can be re-contracted only if both lessee and lessor agree.
Most medium and large scale offices and rental offices owned by major companies use this type of contract.
- Membership sign-up For short-term (one month to two years) serviced offices and rental offices, it is common to ask for a membership sign-up that allows all members to have access to the space.