Real estate transactions in Japan by institutional funds in the second half of 2018 reached 1.729 trillion Yen (approx.15.8 billion USD), down 34% from the second half of 2017 and the lowest level seen in six years.
The Kansai Electric Power Co. and Tokyo Gas have jointly acquired the trust beneficiary rights to Shiba Park Building in central Tokyo on March 20. The acquisition price has not been made public, but insiders suggest a price somewhere in the range of 150 billion Yen (approx. 1.4 billion USD).
The office vacancy rate across Tokyo’s five central business districts of Chiyoda, Chuo, Minato, Shinjuku and Shibuya dropped to 3.22% in July, down 0.04 points from June and down 0.72 points from July 2016. This is close to the record low of of 3.03% reported in April 2008 and down from a high of 9.43% seen in June 2012.
The vacancy rate in existing buildings (excluding new construction) was 2.87% in July, down 0.74 points from last year.
In Shinjuku ward, the vacancy rate was 1.68%, down 0.06 points from the previous month and down 1.30 points from last year. The vacancy rate dropped to the 1% range in May 2017.
Shiba Park Building, a landmark office building in central Tokyo, is being offered for sale again, with insiders suggesting it could sell for more than 160 billion Yen (1.3 billion USD). *Update: Several months later, the owners decided to take advantage of low borrowing rates to refinance rather than sell the building, with the net rental income providing a more attractive return than disposal of the asset.
The 14-storey building has a total floor area of 103,000 sqm (1.1 million sq.ft), of which 83,000 sqm is leasable space. It was built in 1982 by Shuwa Corporation, a real estate developer that invested heavily in US properties during Japan’s bubble economy in the late 1980s. Shuwa was also the developer of numerous ‘Shuwa Residence’ vintage apartment buildings built across Tokyo and Saitama in the 1960s and 1970s.
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*Update: This property is no longer available*
This is a brand new retail building
for sale in Shibuya offering immediate cash flow. The 3-storey concrete building was completed in September 2015 and is fully leased to a sub-leasing company for 1,389,710 Yen per month. The sale is for the tenanted building and the freehold land.
There are three separate spaces, each with their own entrance. Each floor has a ceiling height of 3.5 meters, much higher than the 2.4 ~ 2.6 meter ceilings found in most normal buildings. There is also a rooftop terrace for entertaining, which is accessible via the retail/office space on the 2nd and 3rd floors. The interiors are bare for tenants to fit out.
It is located halfway between Omotesando and Shibuya Stations, and is 30 meters behind the busy Aoyama Dori Street. The surrounding area is a mix of office, retail, restaurants, cafes and residential, but is primarily a commercial area. It is 200 meters from the offices of Conde Nast, Yves Saint Lauren and Alexander McQueen.
NTT Urban Development have converted a 22-year old office building in Chiyoda-ku into a mixed-use serviced apartment, share office and serviced office space.
‘Hive Tokyo’ (formerly Pacific Square Kudan Minami) is targeted towards both Japanese and foreign clients. The 10-storey building is located across the street from the Yasukuni Shrine and a 6 minute walk from Ichigaya Station. The building is scheduled to open in August 2015.
The Japanese government is redeveloping a state-owned site in the Otemachi district near Tokyo Station.
The Urban Renaissance Agency, a semipublic housing company, will build a two office towers which will then be sold to a real estate company or fund once it has been filled with tenants. The sale price is expected to be over 200 billion Yen (1.62 billion USD), which, if achieved, would make it the highest price ever seen for government property.
To date, the most expensive recorded sale of state-owned land was for the former Japan Defense Agency land in Roppongi (now Tokyo Midtown). The land sold to a consortium of real estate developers in 2000 for 180 billion Yen.
Mitsui Fudosan and Tokyo Tatemono have plans for a 600 billion Yen (5 billion USD) redevelopment on the eastern side of Tokyo Station. Two buildings up to 250 meters tall will be built in the Yaesu 1 and 2 Chome districts. The developers are considering including residential, retail, education, cultural and medical facilities with English-speaking staff in the complex. The Yaesu area currently has a resident population of just 110 people, so residential supply has been very limited.
The redevelopment site is located in a National Strategic Special Zone. These zones have been created to encourage the creation of full-service business districts that are internationally competitive. Developers may receive allowances to provide for extra floor-area ratios and foreign companies may receive additional benefits to locate in these areas.
According to Miki Shoji’s office report, the office vacancy rate in Tokyo’s five central business districts (Chiyoda, Chuo, Minato, Shinjuku and Shibuya) was 6.20% in July, down 0.25 points from the previous month and down 2.09 points from last year. This is the lowest level seen since March 2009 when vacancy rates were 6.05%.
The vacancy rate in brand new buildings was 17.41%, down 0.68 points from the previous month but up 4.69 points from last year.
The following office buildings were completed in July:
- Mercros Building, Nihonbashi, Chuo-ku: 9 floors; 6,980 sqm floorspace.
- Tamachi Front Building, Shiba, Minato-ku: 9 floors; 5,730 sqm floorspace.
- PMO Shiba Koen, Minato-ku: 8 floors; 3,500 sqm floorspace.
Mitsubishi Jisho Residence announced that they are entering the building renovation business. With the cooperation of their subsidiary MEC eco LIFE Co. as well as Real Tokyo Estate, Mitsubishi plan to rent entire buildings from owners, carry out refurbishments, including earthquake-retrofitting, and then offer the newly made-over spaces for rent.
The owners of older office buildings can have a difficult time attracting tenants and such buildings tend to have high vacancy rates. As such, landlords of buildings with little-to-no rental income are less inclined to carry out renovations on their own.