Office Rent Climbing in Central Tokyo: Up 10.88 Percent

June 7, 2007
By Ken Worsley

Earlier today, Miki Shoji released their quarterly Tokyo Office Building Market Research Report for April 2007. The report covers the five central wards of Tokyo (Shinjuku, Shibuya, Minato, Chiyoda and Chuo Wards). They surveyed 2,614 office buildings (28 new and 2,586 existing) that have at least 330 square meters of office space for rent on each floor. New buildings are defined as having their office space come online after April 1, 2006.

According to the report, the average vacancy rate in the five central wards of Tokyo stood at 2.72%, which was down slightly from January. Vacancy rates have declined sharply since December 2003, when they stood at about 8% in central Tokyo. At 1.56 percent, Chiyoda was the only ward with a vacancy rate under 2 percent.

The average rent in March 2007 stood at 20,509 yen per tsubo, or 3.3 square meters. This was up 10.88% from March 2006. The average rent at newly built buildings stood at 32,075 yen per tsubo, up 18.56% from a year ago. Average rent at existing buildings was 19,822 yen per tsubo, up 10.13% from a year ago.

By ward, Shibuya remains the most expensive place to rent an office, with Minato (2nd) and Chiyoda (3rd) slowly catching up. Rents in Chuo Ward also increased, though at a slower pace, and rents in Shinjuku came in last, the only ward showing a decline in rent per tsubo since the last quarter.

Back in March, the Ministry of Land, Infrastructure and Transport released a report showing that land prices in Tokyo had risen 9.4% in 2006. Minato Ward’s Minami-Aoyama area boasted the land with the highest value per square meter (finally passing ahead of Ginza).

And as we know, foreigners were on the buying end of 25% of Japan’s real estate sales transactions last year.

Filed Under Business, Economics, Japan, Real Estate

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