Japan Office Real Estate Market Size
| Study Period | 2019 - 2029 |
| Base Year For Estimation | 2023 |
| Forecast Data Period | 2024 - 2029 |
| Historical Data Period | 2019 - 2022 |
| CAGR | > 4.00 % |
| Market Concentration | Low |
Major Players
*Disclaimer: Major Players sorted in no particular order |
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Japan Office Real Estate Market Analysis
The Japanese office real estate market is expected to register a CAGR of over 4% during the forecast period.
In Japan, the COVID-19 pandemic sparked dramatic shifts in workplace working practices and locations. In reaction to the pandemic, roughly 60% of companies introduced remote working. In the office market, the number of relocations or new openings was placed on hold, delayed, or canceled due to the impact of the pandemic. In October 2021, about 37% of companies used remote work for employees.
- Through 2022, the vacancy rate for Grade A offices is expected to rise by about 2%.At the same time, about 190,000 tsubos (6,28,900 square meters) of new Grade A office space is expected to be delivered in 2023, making it the second-highest total in history after 2018. The Grade A vacancy rate is expected to reach 3.5% in Q4 2023, up 2.3 percentage points from Q4 2020.
- As the economy gets better, it is expected that most people will want to work in offices in regional cities in 2022 or 2023, depending on the city. In most regional cities, vacancy rates should begin to drop in 2022. On the other hand, the quantity of new supply is likely to influence the rate of increase. In comparison to other cities, the quantity of additional office space anticipated for completion over the next three years in Yokohama, Kanazawa, and Fukuoka is higher.
Japan Office Real Estate Market Trends
This section covers the major market trends shaping the Japan Office Real Estate Market according to our research experts:
Rise in Start-ups Driving the Market
Since digital use is growing and e-commerce is booming in a post-Covid world, it is thought that fintech and logistics firms will drive the need for office space. Japan is lagging far behind the rest of the world in nurturing start-ups. As of 2021, Japan has only six unicorns. This is even fewer than the 41 in India and the 11 in South Korea. A huge quantity of VC capital, both local and foreign, supports the Japanese startup environment. The country raised a total of USD 6.3 billion among its startups in 2021, and the data for 2022 reflect a similar tendency, with USD 3.39 billion raised in the first half of 2022. In all, the organization has around 300 VC companies that invest in leading Japanese startups. The Japanese government is also extensively involved in the country's efforts to build a competitive and healthy environment for entrepreneurs.
In 2021, SmartNews, Inc. topped the list of leading start-ups in Japan in terms of money raised, with a total of USD 228.78 million raised. Mobility Technologies Co., Ltd. came in second with a total of USD 159.93 million in investment. In 2022, the government plans to introduce a framework to provide financial support for large companies when they hire people who plan to later start businesses and for start-ups that ask to borrow human resources from large companies.
Tokyo's office demands shifting to a hybrid model, boosting the market
Grade A office rentals in Tokyo's five central wards started a downturn phase in 2020 after growing for eight years since 2012. With unprecedented measures like the state of emergency and the government's call to work from home (WFH), a dramatic shift in work patterns is hurting Tokyo's office demand. Companies with headquarters in Europe and the US, where infection rates were higher, put the safety of their employees in Japanese offices at the top of their list of priorities.As a result of the reduced office footprint, numerous overseas enterprises have relocated.
Because of the concentration of domestic firms' head offices in Otemachi and Marunouchi, the rental level is the highest, and the area maintains a low level of 1.9%. Foreign enterprises are prevalent in the Akasaka/Roppongi region. Due to attractive rental levels for buildings with large vacancies, the vacancy rate momentarily jumped to 4% but gradually returned to 2.6%. After the state of emergency was declared in April 2020, the vacancy rate in Shinjuku/Shibuya, which is popular among IT businesses, increased to 3.6%, particularly in Shibuya. It recovered quickly after that. IT firms that are actively embracing WFH are transitioning to a hybrid working paradigm that combines regular offices, WFH, and flexible offices. Traditional office space demand has also recovered and is currently down to 2.5%.
Japan Office Real Estate Industry Overview
There are both global and regional players in the Japanese office real estate market, and there is a lot of competition on the market.The market is anticipated to regain normalcy by the end of 2022. Companies are gearing up to meet future needs, and many are entering the market for further opportunities.
For example, IWG, which offers hybrid work solutions, told Mitsubishi Estate Co. in December 2022 that it was selling its master franchise in Japan. MEC is acquiring the master franchise from TKP Group by purchasing 100% of the shares in Regus Japan Holdings K.K., which runs 172 flexible workspace sites in Japan, according to an IWG announcement. With the master franchise deal, MEC can use IWG brands like Regus and Spaces all over Japan.
Some of the major players are Mitsui Fudosan, Mitsubishi Estate, Sumitomo Realty & Development, Tokyu Land Corporation, etc.
Japan Office Real Estate Market Leaders
Mitsui Fudosan
Mitsubishi Estate
Sumitomo Realty & Development
Tokyu Land Corporation
Nomura Real Estate Holdings
*Disclaimer: Major Players sorted in no particular order
Japan Office Real Estate Market News
January, 2023: Buildings in the capital's Otemachi business district are becoming more green and lush, as developers resort to plants, trees, and even farms to attract office employees seeking more refreshing work surroundings. Mitsui & Co. and Mitsui Fudosan Co. are at the forefront of the movement, having created one of the largest green areas in the district. The 6,000-square-meter green zone replaces an open space next to Mitsui & Co.'s former headquarters.
December 20, 2022: Tokyu Land Corporation, SolarDuck's partner, has been given the contract to realize the Tokyo Bay ESG Project by the Tokyo Metropolitan Government. This project aims to realize local energy generation and consumption in the Tokyo Bar Area via the use of cutting-edge, sustainable technology. Tokyu Land Corporation (the project owner), SolarDuck (offshore floating solar technology), and Everblue make up the partnership for the Tokyo Bay ESG Project.
November 2022: Sumitomo Realty & Development of Japan will invest 500 billion yen (USD 3.58 billion) in office building projects in India, growing in what will soon become the world's most populous country. The corporation recently spent 35.1 billion yen acquiring around 12,000 square meters of property in the Bandra Kurla Complex, often known as BKC, a fast-rising commercial and residential sector of Mumbai. The location is one of BKC's major office development sites.
Japan Office Real Estate Market Report - Table of Contents
1. INTRODUCTION
1.1 Study Deliverables
1.2 Study Assumptions
1.3 Scope of the Study
2. RESEARCH METHODOLOGY
3. EXECUTIVE SUMMARY
4. MARKET INSIGHTS AND DYNAMICS
4.1 Market Overview
4.2 Market Drivers
4.3 Market Restraints
4.4 Value Chain / Supply Chain Analysis
4.5 Industry Attractiveness - Porter's Five Forces Analysis
4.5.1 Bargaining Power of Buyers/Consumers
4.5.2 Bargaining Power of Suppliers
4.5.3 Threat of New Entrants
4.5.4 Threat of Substitute Products
4.5.5 Intensity of Competitive Rivalry
4.6 Government Regulations and Initiatives
4.7 Technological Trends
4.8 Insights into Rental Yields in the Office Real Estate Segment
4.9 Insights into the Key Office Real Estate Industry Metrics (Supply, Rentals, Prices, Occupancy (%)/Vacancy (%))
4.10 Insights into Office Real Estate Construction Costs
4.11 Insights into Office Real Estate Investment
4.12 Impact of COVID-19 on the Market
5. MARKET SEGMENTATION
5.1 By Key Cities
5.1.1 Tokyo
5.1.2 Kyoto
5.1.3 Rest of Japan
6. COMPETITIVE LANDSCAPE
6.1 Market Concentration Overview
6.2 Company Profiles
6.2.1 Mitsui Fudosan
6.2.2 Mitsubishi Estate Co.
6.2.3 Sumitomo Realty & Development
6.2.4 Tokyu Land Corporation
6.2.5 Nomura Real Estate Holdings
6.2.6 Hulic
6.2.7 Tokyo Tatemono
6.2.8 Mori Trust
6.2.9 Mori Building
6.2.10 Nakano Corporation*
- *List Not Exhaustive
7. MARKET OPPORTUNITIES AND FUTURE TRENDS
8. APPENDIX
Japan Office Real Estate Industry Segmentation
Office real estate is the business of building buildings that companies from different industries can rent or buy. The Japan office real estate market is segmented by key cities (Tokyo, Kyoto, and the rest of Japan). The report offers market size and forecasts for the Japan office real estate market in terms of value (USD billion) for all the above segments. The report also covers the impact of COVID-19 on the market.
| By Key Cities | |
| Tokyo | |
| Kyoto | |
| Rest of Japan |
Japan Office Real Estate Market Research FAQs
What is the current Japan Office Real Estate Market size?
The Japan Office Real Estate Market is projected to register a CAGR of greater than 4% during the forecast period (2024-2029)
Who are the key players in Japan Office Real Estate Market?
Mitsui Fudosan, Mitsubishi Estate, Sumitomo Realty & Development, Tokyu Land Corporation and Nomura Real Estate Holdings are the major companies operating in the Japan Office Real Estate Market.
What years does this Japan Office Real Estate Market cover?
The report covers the Japan Office Real Estate Market historical market size for years: 2019, 2020, 2021, 2022 and 2023. The report also forecasts the Japan Office Real Estate Market size for years: 2024, 2025, 2026, 2027, 2028 and 2029.
Japan Office Real Estate Industry Report
Statistics for the 2024 Japan Office Real Estate market share, size and revenue growth rate, created by Mordor Intelligence™ Industry Reports. Japan Office Real Estate analysis includes a market forecast outlook to 2029 and historical overview. Get a sample of this industry analysis as a free report PDF download.
