Mitsubishi Jisho to start renovating old office buildings

Mitsubishi Jisho Office Renovation 3Mitsubishi 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.

So far, Mitsubishi have renovated two properties in Chiyoda-ku, and plan to renovate and lease out 30 buildings over the next five years.

Building 1: Iwamotocho, Chiyoda-ku

  • Floor area: 387.86 sqm (4173 sqft)
  • Floors: 7
  • Built: 1974
  • Average rent: 12,000 Yen/Tsubo (3,630 Yen/sqm)

Prior to renovations, this was an office building with a small retail space. The renovations included earthquake-retrofitting, removing the dropped ceilings, and adding a SOHO (home-office) style apartment on the 4th floor. The total renovation cost was 17 million Yen. The renovations have managed to increase the achievable rent by about 1.5 times to around 12,000 Yen per Tsubo (3,636 Yen/sqm).

Mitsubishi Jisho Office Renovation 1
^ Building 1

Building 2: Kanda Ogawamachi, Chiyoda-ku

  • 5 min walk from Jinbocho and Ogawamachi Stations
  • Floor area: 2,192.58 sqm (23,592 sqft)
  • Floors: 10 (Floors 1 ~ 6 were renovated by Mitsubishi)
  • Built: 1973
  • 4-year fixed lease until March 2018
  • Average rent: 12,540 Yen/Tsubo (3,800 Yen/sqm)
Mitsubishi Jisho Office Renovation 2
^ Building 2

In October 2013, Mitsubishi started a division specialising in acquiring second-hand apartments, renovating and then re-selling them. They expect to renovate 100 apartments per year and are estimating total annual revenues to exceed 3 billion Yen.

Sources:
Mitsubishi Jisho Residence Press Release, May 29, 2014.
The Nikkei Shimbun, May 29, 2014.

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