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Investing in Mid-sized Office Buildings in the Tokyo Metropolitan Area where Economic Activities are Densely Integrated with Abundant Tenant Demand and Rich Stocks of Properties

The Investment Corporation aims to maximize unitholder profits, obtain stable earnings and achieve sustainable growth in investment assets by mainly investing in and operating mid-sized office buildings in the Tokyo Metropolitan Area (Note 1).

The mid-sized office buildings that the Investment Corporation is investing in and operating are abundant in number, and the transaction and leasing prices are affordable in comparison with large-sized office buildings. They are therefore distinctive in terms of high liquidity from the viewpoint of both transaction and leasing, and in having a very wide range of tenants including small and medium-sized corporations.

The Investment Corporation has long extensive experience and track record in mid-sized office buildings in the Tokyo Metropolitan Area and can identify competitive properties and provide high-quality operation with regard to leasing and management.

Note 1:  "Tokyo Metropolitan Area" refers to major cities in Tokyo Metropolitan, Kanagawa, Saitama, and Chiba Prefectures.

Image for a Typical Mid-sized Office Building

The Investment Corporation defines the image for typical size of mid-sized office buildings as follows.

The image for typical size of mid-sized office buildings

Attractive Features of Mid-sized Office Building Market

Mid-sized office buildings have four pieces of appeals and features that cannot be found in other investments.

  1. 1Large Number of Properties+-

    Enable Selecting Excellent Properties

    ●  It is estimated that the number of general mid-sized office buildings in the five central wards of Tokyo occupies about 83.0% of the total number of rental office buildings.
    ●  We believe that mid-sized office buildings offer a greater investment opportunity because they are more abundant in number than large-sized office buildings so that there are quite a lot of properties for potential transactions, and have better operational efficiency than small-sized office buildings.
    Rental Office Building Ratio by GFA in the Tokyo Central 5 Wards (Note 2)
    Note:  The above data is the proportion of number of buildings based on the size. It covers rental office buildings located in Tokyo Central 5 wards that were surveyed by CBRE (as of the end of Sep. 2016)
    Source:  Based on the survey CBRE conducted at the request of the Asset Management Company
  2. 2High Liquidity+-

    Enable Developing Flexible and Dynamic Investment Strategies

    ●  The number of transactions with a range of prices from around 1 billion to 10 billion yen that is a price level for mid-sized office buildings account for 61.9% of whole transactions for office buildings. Therefore relatively-flexible and dynamic investment strategies can be developed for transactions of mid-sized office buildings due to more active transactions than other-sized buildings.
    The Number of Transactions of Office Buildings by Transaction Size
    Source:  Edited by the KFM, the Investment Corporation's asset management based on "The Number of Office Building Transactions by Transaction Size (Fiscal 2008-2020)" (Fiscal: 2021: End of October) in "Fact-finding Survey on Real Estate Transaction" compiled by Urban Research Institute Corporation, a think tank specializing in real estate in Mizuho Financial Group
  3. 3Rich Tenant Base+-

    Enable Expecting Relatively Stable Rental Revenue

    ●  Main tenants of mid-sized office buildings have fewer than 30 employees in an office.
    ●  We believe that a high occupancy rate can be maintained because 92.2% of the establishments in Tokyo have fewer than 30 employees and it is relatively easy to find a new tenant when a tenant moves out.
    Office Market by the Number of Employees (Tokyo)
    Source:  Compiled by the Asset Management Company based on "2014 Economic Census for Business Frame Tokyo (revised results) (as of March 27, 2017)"
  4. 4Favorable Rental Supply and Demand+-

    Enable Ensuring Property Competitiveness through Proper Property Management and Operation

    ●  As new supplies of small- and mid-sized office buildings in the past 20 years are limited in comparison with large-sized office buildings, we believe that proper operational management, facility renewal and value-upgrading works will greatly influence property competitiveness.
    Tokyo 23 Wards Office Stock Pyramid by Size and Age (Based on Net Rentable Area)
    Source:  Compiled by the Asset Management Company based on "Tokyo 23 Wards New Supply of Office Buildings & Office Pyramid 2021" published by XYMAX REAL ESTATE INSTITUTE Corporation on January 12, 2022