Omotesando office building reaches completion

Mitsubishi Estate and Y.K. Goko completed construction of the 3rd MINAMI AOYAMA office building on March 16.

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Construction starts on new Yaesu building

On March 13, Daibiru began construction of a new commercial building in Yaesu. This forms part of the real estate company’s Design100 Project Phase-II which is aimed at maintaining and strengthening the competitiveness of existing assets. In this case, the previous Yaesu Dai Building that stood on this site was demolished. It had been designed by famed architect Togo Murano and completed in 1967.Read more

Tokyo's annual office supply forecast for 2023 - 2026

With the completion of several large-scale office buildings later this year, the total supply of new office space to hit the market in 2023 is going to be more than double what it was in 2022.

XYMAX Corporation’s research institute is forecasting a supply of 224,000 tsubo (740,000 sqm or 7.9 million sq.ft) of new office space this year. It is still below the peak of 275,000 tsubo supplied in 2020.

Between now and 2026, 75% of the office supply will centered in Chiyoda, Chuo and Minato, aka central Tokyo’s 3 wards. Adding in Shinjuku and Shibuya brings the total share to 86%. The average annual supply over the past 10 years has been around 159,000 tsubo. It is expected to drop to an average of 158,000 tsubo from 2023 to 2026.

Work styles have changed since the onset of the pandemic, and tenants are now favoring buildings that offer a variety of amenities, such as communal lounges and private booths for online meetings. These features are typically not found in older office buildings. Landlords are also mixing up the floor sizes on offer by splitting up some floors to attract small-to-mid sized corporate tenants. 

And while the odds of completely leasing out a new building prior to completion may be lower, developers are taking this into account and allowing more time to fill their buildings with the right mix of tenants. 

The phenomenon of secondary vacancies, where older buildings see increasing vacancies as the tenants move into newer ones, is starting to become apparent outside of the central 5 wards, with a growing divide between the high-demand buildings in prime locations, and the older, hard-to-fill buildings in second-tier locations.

The Tokyo Shimbun, March 14, 2023.
Xymax, January 18, 2023.

Tokyo's office vacancy rate hits 12-month low

Tokyo’s office vacancy rate saw a slight improvement in February, dropping by 0.11 percentage points to 6.15%, according to office brokerage Miki Shoji.

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Why Japan's developers and investors have their sights set on mid-size office buildings

In a recent interview in the Mainichi Shibun’s Weekly Economist, the president of Ichigo Investment Advisors said that they found mid-sized office buildings to be advantageous during the slowdown in the office market.

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Tokyu Plaza Ginza sold

On March 3, Tokyu Fudosan Holdings Corporation announced the sale of Tokyu Plaza Ginza. The sale price was not disclosed, although it had a book value of 118.5 billion Yen (US$872 million) as of March 2022. Tokyu is expecting an impairment loss of 21.1 billion Yen for the fiscal year ending March 2023.

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REIT acquires partial ownership in ARGYLE aoyama

A 50% quasi co-ownership share in the ARGYLE aoyama on the corner of Aoyama and Gaien-Nishi streets in central Tokyo has been acquired by the Japan Real Estate REIT for 23.9 billion Yen (approx. US$175 million). The building is fully leased and the cap rate is 2.9%.

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New Issey Miyake store completed in Ginza

Yasuda Real Estate has completed construction of its 3rd project in Ginza.  The 9-story Ginza Matsuya-dori Yasuda Building will have Issey Miyake as the key tenant on the first 4 floors.

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35-story tower for Kyobashi

Tokyo Tatemono is planning a 35-story, 180-meter-tall high-rise for Kyobashi. Construction will start in 2025 with completion tentatively scheduled for 2029. A city planning decision was granted on January 13.

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Daikanyama retail sells for 1.8 billion Yen

A low-rise retail and office building just behind Daikanyama Station sold for 1.877 billion Yen (approx. 14.3 million USD). The seller, Starhill Global REIT, entered into a sale agreement in December with an undisclosed buyer.

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