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A month after the successful Shinnenkai on 24 January another business relations event was organized by the Netherlands Chamber of Commerce (NCCJ) Japan. The year’s first edition of ‘Briefing & Drinks’ was hosted by NCCJ member Colliers International at their Roppongi Headquarters.

A briefing first and drinks afterwards in the bar downstairs. Greg Turnbull answered all sorts of questions of the participants about saving occupancy costs, market trends and forecasts on the Tokyo Office Market.

Employed by Colliers International Japan in 2000, Manager and Senior Tenant Representative Greg Turnbull is exceptionally knowledgeable of the Japanese Real Estate Market. “I will talk about the Tokyo Office Market, that’s what I do every day, but first I want to spend a little bit of time on occupancy costs. What are the costs and how you manage them?”

It’s obvious, every situation is different. The general structure of what goes into the costs of a small or bigger office is pretty much the same: rent, fit-out, restauration, utilities and of few more. The most expensive and disruptive is starting an office or moving one. “Give it a thought to make a flexible office with everything you need, where you can take out a few meeting rooms when you need space for extra people”, Turnbull says. “One of the classic mistakes is not to plan far out into the future. Most tenancies are 10 to 15 years long, but most leases are much shorter than that. Consider headcount, office space and the possibilities of reorganizing the interior when your company expands instead of moving out.” Greg Turnbull says, “it’s extremely important that you have a workspace strategy’. It’s clear that when discussing leases and renewals you need to be future proof. As a tenant you are in a strong position and many leases in Japan allow for the rent to be negotiated any time.

Moving away from the occupancy costs section Greg Turnbull gave the audience a Tokyo market update. Some of the features of it: very low vacancy levels, pre-commitment for 2017 is low, rents to soften on weak demand and the amount of new buildings added to the market is historically low. “However in 2018 and 2019”, Turnbull says, “very, very large supplies are being added to the local stock”. There is a re-balancing of the market going on. One of the slides of the presentation showed the impressive number of 76 buildings being completed from 2016 to 2021. Over 70% of the new office buildings are in the central 3 wards and mostly in established business areas. The large developments continue beyond 2021 in central Tokyo. Buildings are coming back to the central corridor along Tokyo station because of accessibility (clients, workers), industry cluster and prestige. Toranomon will be a total different place in a few years from now. “Though the quality of these buildings is too high”, Greg Turnbull says. “It’s like a 5 star hotel, but people actually need a business hotel. The new offices have higher standards than the market wants.” Japan is not a growing nation. The population is declining and Japanese companies also invest abroad. Lease prices were going up and down the last 20 years, but a very few places a going up nowadays. Turnbull concludes: “Gradually it will go down and everybody is waiting for the first one to drop the lease price.”

About Greg Turnbull
Colliers International is a full services real estate company. On a day-to-day basis Australian born Greg and his colleagues are highly active providing strategic planning advice for office lease renewal, lease expiry negotiations and relocations for clients across Japan. Recent projects have included transactions representing foreign government related entities, financial services, manufacturing, management consultancy and technology related firms. Greg also works closely with other real estate professionals in North America, Europe and Asia to provide high quality Corporate Real Estate delivery for Japanese firms with global real estate portfolios. (source: www.colliers.com/en-gb/japan)