The growth of digital hotspots in Tokyo

August 8, 2019 / By  

Digital hotspots is the name given to areas characterized by high concentration of tech companies and appear in various cities around the world. As described in the latest JLL Cities Research report titled Innovation Geographies, innovation and talent concentration have now become one of the most significant factors in the intensifying global city competition. Fostering and embracing digital hotspots is essential for many cities’ long-term success and growth. In Tokyo, Shibuya’s momentum is striking and shows potential to be a major digital hotspot.

In order to identify the emerging digital hotspots in Tokyo, we profiled 20 tech companies, including highly ranked global tech firms from the “Forbes Global 2000” and Japanese major tech firms. The results of this investigation revealed that leading tech companies occupied office space as large as 200,000 sqm, 170,000 sqm, and 90,000 sqm in Shibuya-ku, Minato-ku, and Chiyoda-ku respectively. The data demonstrates that there is an obvious strong demand for office space, particularly in Shibuya-ku. As tech companies tend to cluster in Shibuya, the popularity of the district is likely to be a driving force for office demand in this area.

Figure 1 – Office space occupied by tech companies (sqm)
Source: JLL July 2019

However, Shibuya’s office stock is not abundant given its stock of Grade A and Grade B office space being the lowest in Tokyo CBD. This means that it is difficult to secure a large amount of office floor compared with other areas. Even under these circumstances, new office supply has been increasing in the Shibuya area, due to recent large-scale redevelopment projects around Shibuya station. In particular, from 2018 to 2019, approximately 230,000 sqm of new office space was available in Shibuya, wherein 60% of the space was absorbed by leading tech companies. The percentage shows the significant presence of major tech companies Shibuya’s as key tenants leading to the development of the entire area as a digital hotspot.

Google plans to relocate to “Shibuya Stream” in 2019, and will lease all office floors (22 stories) to accommodate double the size of Google’s current number of employees. Cyber Agent will move to “Abema Towers” and occupy the whole building (13 stories). Consistent with this trend, other tech-related companies are likely to cluster in the surrounding office buildings, and the concentration of tech companies will continue to grow.

In addition, there is an attempt to not only improve Shibuya’s “hardware”, such as completion of large office buildings, but also enhance “softer” elements. Tech companies have sought to promote the city’s attractiveness and employee-friendliness by holding events for young engineers under the sponsorship of the Shibuya City Government. It is also worth noting that the collaboration between business and local government has been a strong generator of future-oriented urban development.

Shibuya’s rich local culture, in combination with a vibrant skyline of large office buildings, will breathe new life into the city. This will attract talent, create opportunities to connect with industry peers, and foster the growth of new communities and innovation. We expect that Shibuya will successfully transform into a digital hotspot of truly global status.

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