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Market Trend Survey of Large-Scale Office Buildings in Tokyo’s 23 Wards (Special Bulletin Report)
Market Trend Survey of Large-Scale Office Buildings in Tokyo’s 23 WardsSpecial Bulletin Report of Survey Results as of December 31, 2014
For more information & inquiries, please contact:
Kazuaki Yamaguchi or Keita Oka｜Marketing Department, Leasing Operations Division, Mori Building Co., Ltd.
Roppongi Hills Mori Tower, 6-10-1 Roppongi, Minato-ku, Tokyo 106-6155｜TEL 03-6406-6672｜URL http://www.mori.co.jp
Since 1986, Mori Building Co., Ltd. (Minato-ku, Tokyo; President & CEO Shingo Tsuji) has regularly conducted market surveys of demand and supply trends for 10,000m2-class or higher o�ce buildings that were constructed in Tokyo’s 23 wards since 1986 (hereinafter referred to as “large-scale o�ce buildings”). Having just completed the tabulation of the results of our most recent survey, we are pleased to present you with this report.
Research execution: End of December 2014
Research area: Tokyo’s 23 Wards
Research subject buildings: Buildings with total o�ce �oor area exceeding 10,000m2 with a construction completion date of 1986 or later
April 22, 2015
＜Tokyo’s 23 Wards＞○ Supply volume in 2014 was 870,000m2 (150% of the previous year’s volume).
○ Supply volume in 2015 will be 1,100,000m2 (126% of the previous year’s volume).
＜Central 3 Wards＞○ Supply volume in 2014 was 700,000m2 (130% of the previous year’s volume).
○ Supply volume in 2015 of 800,000m2 (114% of the previous year’s volume) will account for 73%
of the supply volume of Tokyo’s 23 Wards.
＜Tokyo’s 23 Wards＞○ Absorption capacity (new demand) in 2014 was 1,390,000m2 (140% of the previous year).
○ Vacancy rate at the end of 2014 was 4.3% (1.9 point decrease from the previous year).
＜Central 3 Wards＞○ Absorption capacity (new demand) in 2014 was 1,060,000m2 (174% of the previous year).
○ Vacancy rate at the end of 2014 was 3.5% (2.4 point decrease from the previous year).
■ Supply Trends
Greater demand than predicted for Office Space led to a lower vacancy rate in 2014.Supply volume for 2015 will exceed the historical average.
■ Demand Trends
※ Supply volume is calculated based on publicly available information as well as on-site and “interview” research undertaken in December 2014.
※ Supply volume is a tabulation of gross total o�ce �oor area of all large-scale o�ce buildings completed since 1986, including properties owned and used by the same company.
※ Absorption capacity (new demand) is the newly occupied o�ce �oor space for a given year of all large-scale o�ce buildings constructed since 1986 and is calculated as follows: (vacant o�ce �oor space at the end of the previous year) + (newly supplied �oor space) - (vacant �oor space at the end of the current year). In order to compare “supply volume” and “demand volume”, leasable �oor space values are converted to a total �oor area value by applying an average “e�ective rentable space ratio” for large-scale buildings.
■ “Survey of Large-Scale Office Building Market in Tokyo’s 23 Wards” Framework
Market Trend Survey of Large-Scale Office Buildings in Tokyo’s 23 Wards (Special Bulletin Report)
‒ 1 ‒
1 Supply Trends
The 2014 supply volume of large-scale o�ce buildings in Tokyo’s 23 Wards (870,000m2) exceeded the relatively low level of the previous year (580,000m2), yet did not surpass the historic average. Supply volume for 2015 is expected to be 1,100,000m2 and remain above the 1,000,000m2 level even after 2015. The annual average supply volume over the next 5 years (2015-2019) is forecast to be 1,120,000m2/year, surpassing the historic average (1,030,000m2/year) (Figure 1).
＜Tokyo’s 23 Wards＞○ Supply volume in 2014 was 870,000m2 (150% of the previous year’s volume).○ Supply volume in 2015 will be 1,100,000m2 (126% of the previous year’s volume).＜Central 3 Wards＞○ Supply volume in 2014 was 700,000m2 (130% of the previous year’s volume).○ Supply volume in 2015 of 800,000m2 (114% of the previous year’s volume) will account for 73% of the supply volume of Tokyo’s 23 Wards.
Figure 1: Large-Scale O�ce Building Supply Volume Trends in Tokyo’s 23 Wards
The average large-scale o�ce building supply volume in the Central 3 Wards for 2014 was 700,000m2, and is forecast as 800,000m2 in 2015. Over the next 5 years (2015-2019), the average will increase to 790,000m2/year, surpassing the average of 670,000m2/year for the past 10 years (2005-2014) (Figure 2).
Figure 2: Large-Scale O�ce Building Supply Volume by Area
0
50
100
150
200
250
(10,000m2)
’93’92’91’90’89’88’87’86 ’94 ’95 ’96 ’97 ’98 ’99 ’00 ’01 ’02 ’03 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 ’16 ’17
1986～2014① Properties ……………………… 819② Gross Floor Space …… 29,890,000m2
2015～2019① Properties ……………………… 90② Gross Floor Space ……5,590,000m2
Supply Volume (Planned)Supply (No. of Properties)
Supply Volume (Actual)
12
24
32
4136
15 1416
19
28
42
37
19
2826
2125
3129
32
16 16
232019
47
4446
29
30
21
40
56 55
8383100 99
36
72
91
125
216
121
77
154
119
65
86 85
58
175
87
110 116105105 101101
127127
108 104114 118
183
92
119
74
Historic Average1,030,000m2/year
Average from 20151,120,000m2/year
Supply/Properties
Supply/Floor Space
’18
9999
’19
117
19
12
200
250(10,000m2)
150
100
50
0
Other 20 Wards
Central 3 Wards
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
93
8101
89
38
127
105
49
154
9044
21
65
6536
49
85
37
81
117
97
54
45858
70 80
30
110
17
87
78
175
21
8629
119
2005～2014Average Supply:670,000m2/year
2015～2019Average Supply:790,000m2/year
55
62
116
2018 2019
69
877
105
25
80
0
50
100
150
200
250
300
0
10
20
30
40
50
0
50
100
150
200
250
Market Trend Survey of Large-Scale Office Buildings in Tokyo’s 23 Wards (Special Bulletin Report)
‒ 2 ‒
The Central 3 Wards are forecast to account for 71% of total supply during the next 5-year period, showing an increase from the previous 5-year period. When examined by year, while this proportion diminishes only in 2017, the Central 3 Wards will again account for 90% of total supply in 2018 (Figures 3 and 4).
Figure 3: Large-Scale O�ce Building Supply Volume by Area
Figure 4: Annual Large-Scale O�ce Building Supply Volume by Area over the next 5 Years
2 Demand Trends
In 2014 in Tokyo’s 23 Wards, absorption capacity for large-scale o�ce buildings was 1,390,000m2 (140% of the previous year). On the other hand, the supply volume was 870,000m2 (150% of the previous year’s volume), falling below the absorption capacity. Although the vacancy rate for the end of 2014 was forecast to be 4.6% last year, the actual vacancy rate decreased to a more favorable 4.3% (a 1.9 point decrease from the previous year) due to an accumulated absorption capacity in the second half of 2014 which exceeded expectations (Figure 5).
＜Tokyo’s 23 Wards＞○ Absorption capacity (new demand) in 2014 was 1,390,000m2 (140% of the previous year).○ Vacancy rate at the end of 2014 was 4.3% (1.9 point decrease from the previous year).＜Central 3 Wards＞○ Absorption capacity (new demand) in 2014 was 1,060,000m2 (174% of the previous year).○ Vacancy rate at the end of 2014 was 3.5% (2.4 point decrease from the previous year).
Figure 5: Large-Scale O�ce Building Supply Volume, Absorption Capacity and Vacancy Rate Trends
0
50
100
150
200
250
(10,000m2)
Supply Volume New Demand Vacancy Rate
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 1H 2014 2H 20142012
92
123 119130
74 8099 91 91
54
125
48
216
121
142
77
115
154157
119122
65
34
86
31
8569
117
91
175
139
3644
7288
4.93.4
2.7 3.1 2.41.2
3.6
8.16.7
5.3
3.2 2.8 2.53.8
5.9 6.3 6.97.8
（%）
4.35.0（%）
2013 2014
99
58
139
87
6.2
4.3224
0 20 40 60 80 100（%）
’05～’09
’10～’14
’15～’19
Other 20 WardsCentral 3 Wards
75%(750,000m2/year)
25%(250,000m2/year)
56%(590,000m2/year)
44%(460,000m2/year)
71%(790,000m2/year)
29%(330,000m2/year)
0 20 40 60 80 100（%）
2019
2015
2016
2017
2018
Other 20 WardsCentral 3 Wards
73%(800,000m2/year)
27%(300,000m2/year)
76%(800,000m2/year)
47%(550,000m2/year)
53%(620,000m2/year)
92%(930,000m2/year)
24%(250,000m2/year)
8%(80,000m2/year)
70%(890,000m2/year)
30%(380,000m2/year)
66
97
21
43
0 20 40 60 80 100 0 20 40 60 80 100
0
50
100
150
200
0
5
10
0
5
10
Market Trend Survey of Large-Scale Office Buildings in Tokyo’s 23 Wards (Special Bulletin Report)
‒ 3 ‒
Absorption capacity for large-scale o�ce buildings in the Central 3 Wards in 2014 reached 1,060,000m2 (174% of the previous year). This is the �rst time for capacity to exceed 1,000,000m2 in the past 8 years, since 2006. Absorption capacity exceeded supply volume (700,000m2), causing the vacancy rate at the end of 2014 to drop by 2.4 points from the previous year to 3.5%. In both the �rst and second half of the year, absorption capacity exceeded supply volume, causing the vacancy rate to fall. In the second half, in particular, the absorption capacity remained high (360,000m2 or 51% of �rst half absorption capacity) despite a reduced supply volume (100,000m2 or 17% of �rst half supply volume) in the second half of 2014. As a result, the vacancy rate in the Central 3 Wards dropped by 1.6 points between the end of June 2014 (5.1%) and the end of 2014 (3.5%).
On the other hand, absorption capacity in the Other 20 Wards was 330,000m2 (87% of the previous year). As in the Central 3 Wards, absorption capacity exceeded supply volume (170,000m2), causing the vacancy rate to drop. Although the vacancy rate decreased in the �rst half of the year, absorption capacity dropped below supply volume in the second half, causing the vacancy rate to increase (Figure 6).
Figure 6: Supply, Absorption Capacity and Vacancy Rate Trends by Area
（%）
（%）
2005 2006 2007 2008 2009 2010 2011 1H 20142014 2H 20142012
69
8
85
30
105
49
103
54
90
29
78
43
44
21
29
5 65
21
35
－4
36
49
50
19
－20
0
20
40
60
80
100
120
140
160
180
200
220
240
(10,000m2)
4.03.3
1.8
3.3
5.6
8.08.4
9.3
2.52.5
3.2
4.2
6.1
5.05.7
6.5
2013
37
81
21
7097
78
61
78 4
54
38
61
17
70
33
106
6
60
11
10
7
36
26
71
6.6 6.6
5.1
5.2
3.5
（%）
（%）
5.2
3.5
5.9 5.9
New Demand (Central 3 Wards) New Demand (Other 20 Wards)
Vacancy Rate (Central 3 Wards)
Vacancy Rate (Other 20 Wards)
Supply (Central 3 Wards) Supply (Other 20 Wards)
5.0
0
20
40
60
80
100
120
140
160
180
0
20
40
60
80
100
120
140
160
180
0.0
1.9
3.8
5.7
7.6
9.5
0.0
1.9
3.8
5.7
7.6
9.5