New Research

Analysis of Length of Occupancy of Office Tenants in Tokyo 23 Wards (2018)
Estimation of average occupancy period of tenants and analysis of departing tenants

In 2014, Xymax Real Estate Institute (hereinafter referred to as "Xymax REI") analyzed and published a report on the occupancy period of office tenants in the Tokyo 23 Wards.*1 Using a statistical method, the analysis estimated the average occupancy period of office tenants, which is the period of time until fifty percent of the tenants, including ongoing tenants at the time of data collection, moves out of the building. Four years after the previous survey, we conducted a new estimation using the same method.

The actual period of time from a tenant's start of occupancy to departure varies, and not all tenants stay in a building for the average occupancy period. Therefore, in this report we also focused on tenants that had moved out and analyzed the actual occupancy periods of departed tenants to examine the factors that affect the lengths of occupancy.

In addition, since there is a certain number of tenants who move out within less than two years, which is shorter than the two-year contract period of a general office lease in Japan, we conducted interviews to gather the reason and background of the departure of each such tenant.

  1. *1Refer to "How long will the office tenant continue to stay?", published on May 26, 2014
    https://www.xymax.co.jp/english/research/release/140526.html
Key Findings
  1. Average occupancy period of office tenants
    • The estimated average occupancy period of office tenants, including ongoing tenants, was 9.6 years.
    • The estimated percentage of tenants continuing to stay in a building for over two years was 93.8%.
    • The results were not significantly different from when the analysis in 2014 was carried out.
  2. Analysis of departed tenants
    • The occupancy period of departed tenants was 5.7 years on average and 4.4 years median.
    • There was no correlation between the contract terms (i.e. occupied area, unit rent) or building specifications (i.e. gross floor area, age) and the occupancy period.
    • Occupancy periods tend to be shorter when rents are declining on the back of a downturn in the office market, and longer when rents are rising.
  3. Cases of tenants departing within less than two years (from the interviews)
    • Although lease of office space is generally a two-year contract in Japan (automatically renewed), there is a certain number of tenants who departed within less than two years. The reasons and backgrounds to their departure vary.
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