WeWork Japan – a new era for flexible office space in TokyoJuly 24, 2018 / By
The growth of flexible space in the Tokyo CBD surged in the first half of 2018 due to the launch of WeWork, a New York-based global co-working operator, which opened its first location in Japan, as of February 2018. Last year, WeWork received an unprecedented $4.4 billion investment from SoftBank Capital and has since announced the opening of 6 locations in Tokyo’s core CBD, which is expected to greatly disrupt the local flexible office market.
Until recently, flexible office space in Tokyo consisted mostly of serviced office. Most locations were based in fringe or suburban areas and often in less competitive buildings as it was difficult to secure office space in high grade buildings due to cost and high requirements from landowners.
However, the operating landscape of flexible office space is quickly changing and with the entry of WeWork, Tokyo is likely to usher in a new era of flexible space.
A high volume of flexible space supply is scheduled for prime central locations including Chiyoda Ward (30,103 sqm) and Minato Ward (13,038 sqm). Flexible space supply is also picking up in Shibuya (11,863 sqm) as WeWork occupied the entire building of The Iceberg owned by Norges Bank (approximately 4,000 sqm net leaseable area). Norges Bank is one example of the many institutional investors who have taken a long-term view on the viability of the flexible space industry.
As a result of the launch of the local operations by WeWork and other co-working operators, the flexible office leasing volume surged. In 1Q18 alone, the industry opened space equivalent to double the full-year 2017 volume.
Six new WeWork locations in Tokyo have been announced and there are expectations to open more locations in the near future. All locations are large-scale (the largest facility seats approximately 1,900 people) and equipped with cutting-edge technology for highly connected individuals. Flexible, community-oriented spaces are picking up in Tokyo in full speed.
Table 1: Recent WeWork Locations in 2018:
Source: WeWork, JLL
The new WeWork locations are all concentrated in the Tokyo CBD area (Chiyoda, Minato, Chuo, Shibuya) including the iconic former Audi building, The Iceberg, and the recently renovated Ginza Six (formerly Matsuzakaya Department Store), which is situated in the prime retail district of Ginza. These are all examples of institutional investors taking a long-term position on the viability of the flexible space industry.
Flexible office space in Tokyo is expected to continue to scale up in the near future and there is great anticipation for the co-working segment to further expand. Increasingly, new developments in the sector seem to indicate that co-working is maturing into the next stage that has been long overdue in the innovative city. Landlords and investors should keep a close eye on the development of this industry.
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