Land prices up in 83% of locations – MLIT LOOK Report

The Ministry of Land, Infrastructure, Transport and Tourism (MLIT) announced the land price movements across Japan for the third quarter in 2014 (July 1 ~ October 1).

According to the Chika Look Report, 124 locations (83% of the total) saw an increase from the previous quarter, and 26 locations (17% of the total) saw no change. For the first time since this survey began in late 2007, none of the 150 survey sites saw a decrease in prices. Of the 124 locations to see a price rise, 122 locations saw prices rise between 0 ~ 3%, while 2 locations (Ginza and Shinjuku 3 Chome) saw prices rise between 3 ~ 6%.

Strong investor demand caused by monetary easing, as well as demand for apartments in areas with convenient access have helped to sustain the price growth.

In greater Tokyo, 58 locations (89% of the total) saw land prices increase, while the remaining 7 locations (11%) saw no change. In greater Osaka, 30 locations (77%) saw prices increase, wile 9 locations (23%) saw no change. In Nagoya, all 14 locations saw prices increase.

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Office vacancy rates in October 2014 – Miki Shoji

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 5.60% in October, down 0.05 points from the previous month and down 1.96 points from last year.

The vacancy rate in brand new office buildings was 14.98%, up 1.08 points from the previous month but down 2.06 points from last year.

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Office vacancy rates in September 2014 – Miki Shoji

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 5.65% in September, down 0.37 points from the previous month and down 2.25 points from last year. This is the first time since February 2009 that vacancy rates had dropped to the 5% range.

The 5% range is considered to be the tipping point between supply and demand. As a result, real estate companies have started to raise rents. Mitsubishi Jisho have begun seeking an increase of rent of around 5 ~ 10% in the 30 buildings they own in the Marunouchi and Otemachi business district in front of Tokyo Station. Mori Building have also started negotiating with tenants in relatively new buildings for higher rents. Mitsui Fudosan are also setting higher rents for new leases.

Meanwhile, office tenants continue to seek ways to control costs and mid-size and regional building owners are hesitant to raise rents. While vacancy rates have fallen sharply, rents are not increasing at the same speed.

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Office vacancy rates in August 2014 – Miki Shoji

Left: Nippon Life Marunouchi Garden Tower; Center: Nihonbashi Diamond Building; Right: Oase Shibaura MJ Building

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 6.08% in August, down 0.18 points from the previous month and down 2.14 points from last year.

The vacancy rate in brand new office buildings was 18.17%, up 0.76 points from the previous month and up 0.24 points from last year.

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Office vacancy rates in July 2014 – Miki Shoji

Mercros Bldg Tamachi Front Bldg
Mercros Building (left) and Tamachi Front Building (right)

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.

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Office vacancy rates in June – Miki Shoji

Iidabashi Grand Bloom
Iidabashi Grand Bloom

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 6.45% in June, down 0.07 points from the previous month and down 2.01 points from last year.

The vacancy rate in brand new buildings was 18.09%, down 2.33 points from the previous month but up 6.49 points from last year.

It is not just large-scale office buildings that are experiencing better conditions, but mid-size buildings are also seeing a boost in demand. All 11 buildings developed under Nomura’s mid-size office brand ‘Premium Midsize Office (PMO)’ are almost fully occupied. Mitsubishi’s renovated small-to-mid sized office building in Kanda is also almost fully occupied. The building has attracted several IT-related tenants who want the freedom to design their own office space. 

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Year-on-year increase in Tokyo office rent for first time since 2008

Iidabashi Grand Bloom
Iidabashi Grand Bloom (left) and Park Court Chiyoda Fujimi The Tower (right)

According to Miki Shoji’s Office Report, the average office rent in Tokyo’s central five business areas (Chiyoda, Chuo, Minato, Shinjuku and Shibuya) in May had increased by 0.21% from 12 months prior. This is the first time since December 2008 that office rents had seen a year-on-year increase. It is also the fifth month in a row to see a month-on-month increase, indicating a turnaround in market conditions.

Landlord, Mitsubishi Jisho, have already hiked up the rent for some existing office tenants by 5 ~ 10%, and new tenants are being faced with rents that are 10 ~ 20% higher than they were in 2012.

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Higher rents and lower vacancy rates expected for Tokyo’s office market

Marunouchi office buildings TokyoCentral Tokyo’s office market is experiencing a rebound as vacancy rates drop to their lowest level since 2009. According to Miki Shoji, the vacancy rate in Tokyo’s central five wards (Chiyoda, Chuo, Minato, Shinjuku and Shibuya) was 6.70% in March – the first time it had fallen below 7% in 4 years and 10 months. In April, it dropped a further 0.06 points to 6.64%.

As market conditions and business outlooks improve, demand is growing from companies looking to locate their operations in earthquake-resistant buildings in the centre of the city. 

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Office vacancy rates in March – Miki Shoji

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 6.70% in March, down 0.31 points from the previous month and down 1.86 points from March 2013. This is the first time since May 2009 that vacancy rates have dropped to the 6% range.

The vacancy rate in brand new buildings was 20.26%, up 0.61 points from the previous month but down 2.98 points from last year. 

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Office vacancy rates in January – Miki Shoji

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 7.18% in January, down 0.16 points from the previous month and down 1.38 points from January 2013. Vacancy rates have been decreasing for the past 7 months.

The vacancy rate in brand new buildings was 14.42%, down 0.08 points from the previous month and down 9.79 points from last year.

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