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Tips for leasing an office space in Tokyo

By on October 31, 2009
Now is the perfect time to establish or relocate your business in Japan. Rents are down, and a tiny bit of savvy, tempered with even a basic local market knowledge, make you as ready as you will ever be to lease the perfect space for your business. The following tips may enhance your efforts.
 
KNOW WHAT YOU ARE GETTING INTO. The office market in Central Tokyo is unlike any other real estate market within Japan or internationally, and your real estate experiences abroad may not always apply in Minato or Chiyoda Wards. Fifteen minutes spent with Google on the Tokyo office market will begin to ground you on asking prices for landlords, especially if you take the extra step of looking up information in Japanese.  Ganbatte! This will give you a tentative baseline to check against what your agent will offer later. Note that many rents are already 10% to 20% lower than previous levels, so landlords are already starting out from a disadvantaged position.
 
KNOW WHAT YOU WANT. As your ideas are coming together, make them a little more concrete, not inflexible, just recognizable. Begin a list of your needs and goals. How many people do you need to house? Do you need to be near customers? Do you have specific budget or style considerations? What locations are suitable? Do you need to be near public transportation? Does your business require meeting rooms or storage or server rooms, etc? Are you going to need furniture or perhaps to build a partition or two to divide your space? To help bring all this together there are dozens of firms to choose from: Call us and we will be happy to make introductions and explain why. Access our homepage as well for a free Project Calculator to help you get started.
 
KNOW WHAT IT MIGHT COST. Rents and deposits in Japan are calculated slightly differently than elsewhere. Rent is calculated by the tsubo, a Japanese unit approximately 3.306m2, and paid by the month. Per-tsubo rates for base rent start at ¥10,000 and rise as high as ¥70,000 per month for high end space. A building maintenance fee would cost an additional ¥0 to ¥3,000 / tsubo each month. Then there are three types of contract fees. Your deposit is a multiple of the base rent, averaging 5 to 10 months for smaller spaces and as much as 15 months for high end spaces. This is your landlord’s only insurance against non-payment of rent and generally refundable. Key money on smaller properties is a traditional gratuity that may be negotiated out in some cases. Depreciation is a percentage of the deposit that your landlord will not refund and may also be negotiated out in some cases.
 
KNOW WHO YOUR FRIENDS ARE. Once you have created a preliminary idea of budget, size and location, you are ready to approach one or more agents. With agents, less is more. The agent who seems most ready to offer solutions toward your goals is likely the right agent for you. Also, independent agents more likely represent the tenant, as they have no affiliation with landlords and tend to negotiate a little more aggressively, a position that makes them worth every yen they earn.

Kevyn Johnson is a director with Platinum Real Estate Consulting and a co-chair for the Architecture, Construction and Real Estate committee of the American Chamber of Commerce in Japan.  He can be reached through our editors or directly at kevyn@platinum1000.com

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