A small retail building behind the Prada Boutique in Omotesando has sold for 12.2 billion Yen (approx. 108 million USD). The Japan Retail Fund Investment Corporation, an affiliate of Mitsubishi Corporation, acquired the trust beneficiary rights to the property on October 25.
The main tenant in the R2 Building / G Building Minami Aoyama 03 is Woolrich. The property is split into two buildings with a total floor area of 1,423 sqm (15,300 sq.ft) and sits on a 960 sqm block of land. The transaction represents a price of approximately 8,570,000 Yen per square meter (approx. 7,000 USD/sq.ft) of floor space. The capitalization rate is approximately 3.0%.
Investors in retail properties in the Omotesando area have been attracted by rising commercial rents. Japan Retail Fund’s news release cited two of their other properties in the immediate area that have seen rents increase by 26% and 118% between lease renewals. Here at Japan Property Central, we often receive inquiries from both domestic and foreign investors looking for retail or commercial properties for sale in prime locations in Omotesando. Supply, however, is extremely thin, with high prices and low yields.
Prada acquired the neighboring Prada Boutique building via a special-purpose company in 2015 with a mortgage of 36 billion Yen (approx. 320 million USD). They continued to lease the building from the SPC for 100 million Yen per month, resulting in a 3.3% gross yield, with the proviso that the monthly rent would increase to 130 million Yen from 2016 onwards.
Nikkei Business Publications, October 18, 2018.
Japan Retail Fund Investment Corporation News Release, October 17, 2018.