Survey of Large-Scale Office Building Supply in Tokyo s 23 Wards 2018

Transcription

1 Survey of Large-Scale Office Building Supply in Tokyo s 23 Wards 218 April 25, 218 Mori Trust Co., Ltd., (Head Office: -ku, Tokyo) has surveyed supply trends for large-scale office buildings with total office space of 1, square meters or more in Tokyo s 23 wards since 1986 and for mid-size office buildings with total office space of 5, square meters to less than 1, square meters since 213, based on various published materials, field surveys, and interviews. The results of the most recent survey are presented below. In calculating total office floor area, where the survey deals with multipurpose buildings buildings that also contain retail space, residential space, or hotels the calculation includes only the floor area set aside solely for office use. [Survey Date: December 217] Supply to increase in 218 and decline subsequently Supply in 1 2 to be half the past average or lower Main Results of This Survey 1. Supply of large-scale office buildings Supply of large-scale office space in 217 in Tokyo s 23 wards was.76 million square meters, falling short of the past 2-year average of 1.5 million square meters. Supply is projected to be 1.47 million square meters in 218, 1 million square meters in 219, and 1.73 million square meters in. The last would mark the third-highest level in the past 2 years. A subsequent downturn is anticipated for the two years from 1, as supply dips significantly below the past average. 2. Supply trends by area Supply trends in central Tokyo are expected to remain on the same trajectory during the timeframe. Supply in Tokyo s three central wards will remain at 7% of total supply. By district, Otemachi/Marunouchi/Yurakucho will continue to account for the majority of this supply. In Ward, supply is expected to expand in the three districts of Toranomon/Shinbashi, Shibaura/Kaigan, and Shibakoen/Hamamatsucho. In Tokyo s other wards, supply is projected to expand in, Osaki/Gotanda, Toyosu, and Ikebukuro. 3. Supply trends by type of development site In Tokyo s three central wards in 218 2, majority of supply will come from rebuilding. However, supply on undeveloped/underdeveloped land (including redevelopment, etc.) is growing and is expected to reach a pace roughly triple that of the past five years. Outside Tokyo s three central wards, supply on undeveloped/underdeveloped land (including redevelopment, etc.) will account for approximately 8% of total supply. 4. Supply of mid-size office buildings Supply in 217 was 91, square meters, the fourth consecutive year below the 1-year average of 133, square meters. In 218, supply will be 138, square meters, above the average, but it will fall again in 219. In terms of supply share by ward in , Ward will have the highest share. In Ward, supply will continue to grow at a steady rate as it has the past four years. For further information, contact: Keiji Kurokawa, Michihiro Yonehara Strategic Business Planning Group, Office of the President Mori Trust Co., Ltd. Toranomon 2-chome Tower, 3-17 Toranomon 2-Chome, -ku, Tokyo 15-1 JAPAN

2 1. Supply of large-scale office buildings In 217, the supply of large-scale office space in Tokyo s 23 wards was.76 million square meters, below the past 2-year average of 1.5 million square meters. Supply in 218, however, is expected to be 1.47 million square meters, above the past average. Projections see a modest decline in 219 to 1 million square meters but an increase in to 1.73 million square meters, the third-highest level seen over the past 2 years. For the three years from 218, average annual supply is projected to be 1.4 million square meters, second only to the 24 timeframe, when supply averaged 1.53 million square meters. A major downturn is expected thereafter. In 1 2, and in 2 in particular, supply will be just.29 million square meters, the lowest figure in 2 years, in part in reaction to the glut of office space introduced to market through. (Chart 1-1) The average supply of office space for each of the five years from 218 is projected to settle to 1 million square meters, below the past 2-year average of 1.5 million square meters. From 218, for Tokyo s wards, the majority of supply will be located in the three central wards. But even in the other wards, from 218, supply is expected to increase. In, supply is projected to be high and cover a broad area. (Chart 1-2) With respect to supply trends by building size, supply of buildings over 5, square meters will account for the vast majority of supply, approximately 8% of the total, and supply of buildings over 1, square meters will account for around of the total, indicating the trend toward the development of ever-larger office properties. (Chart 1-3) Chart 1-1 Supply trends for large-scale office buildings in Tokyo s 23 wards Office supply in completed buildings (1,m2) average supply: 1,5, m2 /year Office supply in buildings under construction Office supply in buildings to be constructed Number of supply average supply: 1,4, m2 /year 9 Number of supply average supply: 1,,m2 /year '98 '99 ' '1 '2 '3 '4 '5 '6 '7 '8 '9 '1 '11 '12 '13 '14 '15 '16 '17 '18 '19 '2 '21 ' Chart 1-2 Tokyo s three central wards and other wards Tokyo s three central wards (1,m2) average supply: 71, m2 /year 116 ' '19 '2 '21 (1,m2) average supply: 34, m2 /year ' '18 '19 '2 '21 ' Chart 1-3 Supply and ratio by building scale '98 '2 '3 '7 '8 '12 '13 '17 '18 ' 3 (3, m2 /year) 34% (48, m2 /year) 3 (36, m2 /year) 41% (37, m2 /year) 58% (58, m2 /year) 21% (17, m2 /year) (38, m2 /year) (29, m2 /year) 31% (28, m2 /year) 4 (36, m2 /year) 39% 55, m2 /year) 4% (43, m2 /year) 28% ( m2 /year) 2 (19,m2/year) (23,m2/year) % 25% 5% 75% 1% Buildings of 1,m2 or larger Buildings of 5,m2-99,999m2 Buildings of less than 5,m2 Survey of Large-Scale Office Building Supply in Tokyo s 23 Wards 218 2/9

3 2. Supply trends by area Supply is expected to remain concentrated in central Tokyo for the timeframe. The supply in Tokyo s three central wards will continue to account for 7% of total supply. Of the three wards, Ward is projected to stay at around of total supply, retaining the top share, but Ward s share is projected to grow. In Tokyo s other wards, Ward has accounted for a growing presence. (Chart 2-1) By district, supply in the Otemachi/Marunouchi/Yurakucho district continues to be highest; this trend remained unchanged. However, in Ward, whose districts account for a growing proportion of new office space in the Tokyo area, three districts Toranomon/Shinbashi, Shibaura/Kaigan, and Shibakoen/Hamamatsucho entered the top 1., Osaki/Gotanda, Toyosu, and Ikebukuro, districts outside the central three wards, also ranked in the top 1, indicating that new office space is now being built across a wider range of neighborhoods. Chart 2-1 Supply of large-scale office space by ward [ ] 3,42,m2 (7) : 1,8,m2 (24%) Supply (1, m2 ) [218 2] 3,65,m2 (72%) : 1,39,m2 (28%) Supply (1, m2 ) 2% Shinagawa 4% 24% 35% 17% Shinagawa % Shinagawa 5% 8% 4% 2 32% 14% Shinagawa Chart 2-2 Top ten districts (1,m2) 88 7 (2%) [ ] (12%) 45 (1%) () () 25 (5%) 19 (4%) 18 (4%) 15 () () 1 Otemachi Yaesu Marunouchi Nihonbashi Yurakucho Kyobashi Akasaka Roppongi Osaki Gotanda Toranomon Shinbashi Jinbocho Ogawamachi Konan Kojimachi Hirakawacho Kioicho Ginza Sendagaya Jingumae (1,m2) (2) 59 (12%) (8%) (8%) [218 2] 35 (7%) 28 () 25 (5%) (4%) (4%) 12 (2%) 1 Rank ( ) for previous timeframe Otemachi Marunouchi Yurakucho Toranomon Shinbashi Shibaura Kaigan Yaesu Nihonbashi Kyobashi Toyosu Osaki Gotanda Muromachi Honcho Shibakoen Ikebukuro Hamamatsucho 1(1) 2(5) 3( ) 4(2) 5( ) 6( ) 7(4) 8( ) 9( ) 1( ) Survey of Large-Scale Office Building Supply in Tokyo s 23 Wards 218 3/9

4 Chart 2-3 in the key business districts [ ] Sendagaya Jingumae Ichigaya Iidabashi Kudan Kojimachi Fujimi Hirakawacho Kioicho Akasaka Roppongi Otemachi Marunouchi Yurakucho Ward Toranomon Shinbashi Jinbocho Ogawamachi Ginza Ward Yaesu Nihonbashi Kyobashi Toyosu Ward Approx.supply volume :5, m2 ~ Konan :3, m2 ~5, m2 :2, m2 ~3, m2 :1, m2 ~2, m2 Osaki Gotanda [218 2] Ikebukuro Yotsuya Shinanomachi Ward Otemachi Marunouchi Kojimachi Yurakucho Hirakawacho Kioicho Muromachi Honcho Yaesu Nihonbashi Kyobashi Ward Toranomon Shinbashi Shibakoen Ward Hamamatsucho Toyosu Shibaura Kaigan Approx.supply volume :5,m2~ :3,m2~5,m2 :2,m2~3,m2 :1,m2~2,m2 Osaki Gotanda Survey of Large-Scale Office Building Supply in Tokyo s 23 Wards 218 4/9

5 3. Supply trends by type of development site In Tokyo s central three wards, supply through rebuilding predominated. However, the amount of new office space introduced on undeveloped/underdeveloped land (including redevelopment, etc.) is expected to grow substantially to approximately threefold levels of the past five years. In Tokyo s other wards, supply on undeveloped/underdeveloped land (including redevelopment, etc.) will be approximately 8% of the total. (Chart 3-1) Overall, supply on undeveloped/underdeveloped land (including redevelopment, etc.) exceeds the amount created by rebuilding. While rebuilding-based new office supply has been the dominant format for new office supply, this is now marking time. Chart3-1 and ratio by land for development [Tokyo s three central wards] [] (1,m2) 4 (1,m2) (18%) 63 (18%) 171 (47%) (82%) 9 (82%) 194 (5) (8%) 69 (64%) 15 (77%) (2%) (3) (2) Undeveloped/underdeveloped land : Redevelopment, etc. Rebuilding [Definitions] Rebuilding: Land (or the development of such land) previously used as one site, occupied by a building for office, hotel, or residence which has been demolished. Undeveloped/underdeveloped land: Land for highly effective use (or development of such land), including development of clusters of small buildings; land (or the development of such land) not used effectively; for instance, mixed zones of parking lots and older buildings, densely populated residential areas, former plant sites, railway sites, or idle land. Survey of Large-Scale Office Building Supply in Tokyo s 23 Wards 218 5/9

6 4. Supply trends for mid-size office buildings in Tokyo s 23 wards This section summarizes supply trends for mid-size office buildings (building containing 5, to less than 1, square meters of office space). Supply of mid-size office buildings in 217 was 91, square meters, the fourth consecutive year in which the amount introduced was below the past 1-year average of 133, square meters. While the supply in 218 is expected to be above the past 1-year average, this amount is expected to fall short in 219. Supply of mid-size office buildings will be moderate. (Chart 4-1) By supply area, Tokyo s central three wards in 218 and 219 will continue to account for approximately 7% of total supply. Development will continue to concentrate in these wards. Supply in Ward in particular will increase significantly; Ward is expected to include the top three districts in terms of new space supply. Ward continues to maintain a stable share of the supply, while Ward s share is declining significantly. (Chart 4-3 on the next page) Looking at supply trends by land for development, projections for 218 and 219 indicate the majority of supply will come from rebuilding in both Tokyo s central three wards and the other wards. (Chart 4-4 on the next page) Major developers continue to increase their presence in the mid-size office building market. (Chart 4-5) Chart4-1 Supply trends for mid-size office buildings in Tokyo s 23 wards Office supply in completed buildings Office supply in buildings under construction Office supply in buildings to be constructed Number of supply Chart4-2 Supply of mid-size buildings: Ratio by ward and top three districts [ ] (1,m2) average supply: 133, m2 /year Number of supply 8% 7% 1 % 41% ,m2 (68%) : 69,m2 (32%) Top three districts Yaesu Nihonbashi Kyobashi Supply 32, m2 5. Muromachi Honcho Kayabacho Hacchobori Shinkawa 28, m2 24, m2. '8 '9 '1 '11 '12 '13 '14 '15 '16 '17 '18 '19 Survey of Large-Scale Office Building Supply in Tokyo s 23 Wards 218 6/9

7 Chart4-3 Supply of mid-size buildings: Ratio by ward and top three districts [ ] [ ] [ ] 7% 7% 1% 7% 8% 37% 25% 11% 25% 14% 1 % 41% 159,m2 (81%) : 37,m2 () 136,m2 (67%) : 68,m2 (3) 149,m2 (68%) : 69,m2 (32%) Top three districts Supply Top three districts Supply Top three districts Supply Toranomon Shinbashi 31, m2 Toranomon Shinbashi 46, m2 Yaesu Nihonbashi Kyobashi 32, m2 Yaesu Nihonbashi Kyobashi 21, m2 Jinbocho Ogawamachi 16, m2 Muromachi Honcho 28, m2 Uchikanda Kandasudacho 15, m2 Kayabacho Hacchobori Shinkawa 16, m2 Kayabacho Hacchobori Shinkawa 24, m2 Chart4-4 Supply of mid-size buildings: Ratio by type of development site (218-19) [Three central wards] [] Undeveloped or Underdeveloped land 1 Undeveloped or Underdeveloped land 31% Rebuilding 84% Rebuilding 69% Chart4-5 Supply of mid-size buildings: Ratio developed by major developers* [28 212] [ ] [ ] Major developers % 33, m2 /year Major developers 28% 33, m2 /year Major developers 3 43, m2 /year 78% 114, m2 /year 72% 86, m2 /year 64% 76, m2 /year Survey of Large-Scale Office Building Supply in Tokyo s 23 Wards 218 7/9

8 5. Conclusion In 217, vacancies were steadily filled in new office buildings due in part to supply being below the past average. Vacancy rates in existing buildings also continue to decline; office market conditions are currently firm. Projections for the office market over the next five years suggest a major influx of new supply over the three years from 218. However, preoccupancy rates are high at many of these buildings. For the two years from 1, supply is expected to decline sharply, to roughly half the past average. Underpinned by vigorous demand, robust market conditions are expected to continue. One factor driving this demand is companies seeking office environments that support diverse working styles and promote creativity primarily companies seeking to apply workstyle reforms to strengthen productivity. This trend is expected to continue gaining momentum. (See the Appendix on page 11.) To accommodate such needs, future offices will be asked to provide creative platform functions in urban areas that improve the well-being of staff, provide a sophisticated workplace, and promote socializing among people with diverse perspectives through cutting-edge technologies and open communities that help generate new encounters and ideas in various scenarios. This is a key function for urban office spaces in attracting companies and talent from around the world. It s also an issue that needs to be addressed more energetically, through public-private partnerships, to further strengthen international competitiveness. Chart 5-1 Office stock in Tokyo s three central wards Ward Ward Ward (1,m2) 5, 4, 3,195 3, 2, Office space 3,71 3,968 4,45 4,584 4,75 1, '92 '93 '94 '95 '96 '97 '98 '99 ' '1 '2 '3 '4 '5 '6 '7 '8 '9 '1 '11 '12 '13 '14 '15 '16 Source: Compiled by Mori Trust based on An Overview of Tokyo s Land (Tokyo Metropolitan Government) Chart 5-2 Growth of office stock (%) 12% Three central wards Ward Ward Ward 1% Growth rate 8% 4% 2% % -2% '92 '93 '94 '95 '96 '97 '98 '99 ' '1 '2 '3 '4 '5 '6 '7 '8 '9 '1 '11 '12 '13 '14 '15 '16 Source: Compiled by Mori Trust based on An Overview of Tokyo s Land (Tokyo Metropolitan Government) Survey of Large-Scale Office Building Supply in Tokyo s 23 Wards 218 8/9

9 Appendix Excerpt from 217 Tenant Questionnaire The following is an excerpt from the results of a questionnaire of tenant companies conducted from August to October 217. Regarding Promoting working environments and other aspects that encourage diverse and flexible working styles, 3 of the companies responding answered Currently implementing ; answered Currently considering ; and just 4% answered Don t feel it s necessary. Consistent with recent societal attitudes, the results suggest strong interest in the theme of diverse working styles. (Chart A) Chart B addresses the implementation of functions that promote diverse working styles. Functions have been reorganized into Expanding office functions, Promoting digitalization, and Developing personnel systems. Compiling the results shows implementation status clearly differs among the three functions. (Chart C) However, the implementation of certain functions related to Expanding office functions has progressed compared to 213 (Chart D). [Chart A] Initiative Level for Promoting Diverse Working Styles (n=7) [Chart C] 4% 1 Currently implementing Currently considering 3 A management issue, but not yet considered Don t know whether it s necessary Don t feel it s necessary Developing Personnel Systems Promoting Digitalization Expanding Office Functions [Chart B] Initiative Level by Item (n=255) Fitness spaces 4% 7% 69% Refresh spaces 4 24% 2 Social spaces 39% 8% 24% 29% Concentrated work spaces 24% 12% 2 4% Free address 28% 1 14% 45% Satellite office 15% 12% 1 Telecommuting 3 15% 12% 3 Internal SNS 35% 9% 9% 4 Web conferencing 74% 8% 7% 11% Remote attendance management 44% 11% 2 Distribution of smart devices 67% 9% 11% 14% Electronic approval % 21% Permit side jobs/dual professions 12% 4% 12% 72% Short working hours program 64% 8% 2 Flextime program 48% 11% 35% Restrictions on overtime 52% 1 12% % 25% 5% 75% 1% Implemented/planned Considering implementation Want to implement Will not implement Expanding Office Functions 11% 4 Promoting Digitalization 52% 12% 11% 2 Developing Personnel Systems 44% 1% 9% 37% % 25% 5% 75% 1% Implemented/planned Considering implementation Want to implement Will not implement [Chart D] Fitness spaces Social spaces Concentrated work spaces Free address Satellite office Telecommuting 9% 1% % % 3 32% 28% 37% 45% 5% % 1% 2% 4% 5% Most recent survey 213 Survey of Large-Scale Office Building Supply in Tokyo s 23 Wards 218 9/9