Investment in the Japanese real estate market increased by 21% year-over-year in the first half of 2024, partly due to increased divestiture activity among listed companies. Supported by a new trend in corporate real estate (CRE) strategies, companies are also exploring the future of workspaces and industrial assets such as research and development (R&D), manufacturing and logistics. This article focuses on corporate R&D centres, comparing in-house properties (including single-tenant and company-owned) with multi-tenant properties. We also examine corporate attitudes toward opening new R&D centres, and explore the real estate features that align with new strategies and derive business opportunities in the next-generation real estate market.
JLL analysed 214 cases of domestic companies establishing new R&D centres from 1 January 2020 to 31 August 2023. The majority were in-house properties (146 cases), but there were also 54 multi-tenant properties. Figure 1 shows the distribution of real estate-related motivations (four cases with unspecified use).
Figure 1: Motivation for choosing a location based on real estate
Source: Complied by JLL based on company disclosures and various media reports, using 214 cases of R&D centre openings by
companies that opened, or announced plans to open, in Japan between January 1, 2020, and August 31, 2023.
Note: In cases where multiple establishment motives were applicable, they were categorized accordingly, resulting in instances of duplication.
Additionally, only cases supported by company releases or media reports were included.
Hence, the total number of cases may not correspond to the overall count.
The motivation for establishing R&D centres on in-house properties was often the need for space for expansion (32%) or consolidation (21%). However, multi-tenant properties were often chosen for new establishments (76%), offering the flexibility and speed to choose a suitable location. This is particularly popular with companies exploring new or unexplored R&D areas. Recent trends indicate an increasing preference for larger R&D properties, suggesting that multi-tenant locations may become even more attractive for expansion and consolidation in the future.
Considering motivations related to the R&D activity, regardless of property type, promoting knowledge exchange is a key factor (Figure 2; 54% in total, 42% in in-house, and 76% in multi-tenant). Consolidation and establishing a base in a rental facility in an urban area or around a university can enhance interaction with customers and external research institutions and improve communication. In many cases, the motivation for acquiring talent was included in the decision to locate a multi-tenant property (20%). Research-focused companies often require highly skilled researchers and face fierce international competition to acquire talented personnel. State-of-the-art facilities and a high-quality working environment are important considerations regardless of property type. Still, due to the difficulty securing space in urban areas, talent-focused companies are increasingly likely to choose multi-tenant properties.
Figure 2: Motivation for choosing a location based on R&D activities
Source: Complied by JLL based on company disclosures and various media reports, using 214 cases of R&D centre openings by
companies that opened, or announced plans to open, in Japan between January 1, 2020, and August 31, 2023.
Note: In cases where multiple establishment motives were applicable, they were categorized accordingly, resulting in instances of duplication.
Additionally, only cases supported by company releases or media reports were included.
Hence, the total number of cases may not correspond to the overall count.
The rapid growth of the life sciences sector and associated demand for rental R&D space has driven a significant increase in R&D real estate investment in the United States. This industry is also growing in Japan, and the current socio-economic backdrop of shifting corporate CRE strategies and a tight talent supply is expected to accelerate the demand for rental real estate in the Japanese R&D sector. Reflecting the growing demand, rental R&D spaces with a variety of locations and concepts are expected to be developed, providing more options for tenant companies and investors.
More on 'Logistics & Industrial' in 'Japan'
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- Tokyo’s logistics market continues to evolveApril 14, 2022
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