Shortage of space in the Marunouchi business district in Tokyo prompted Mitsubishi Estate Co., one of Japan?s largest real estate developer, to increase office rents in 2013. Company president, Hirotaka Sugiyama said that this move would help them reverse an expected decline in profit. Aside from increasing their rates, Sugiyama said that the company also plans to acquire real estate investment trusts (REITs) or funds in the coming months.
Mitsubishi Estate?s targeted operating profit by March 2014 is 185 billion yen, but because of uncertainties in the market, the company already expects operating profit to fall 8.4 percent for the current business year ending March 2013. Sugiyama explained that cancellations and requests for rent reductions were less than what they have expected last year; and as those kinds of requests dissipate, the company would start increasing rents.
According to CBRE Group Inc., even as average rents in Tokyo fell, office rents in the Marunouchi area are still higher than the average of the five central wards. Marunouchi, Otemachi and Yurakucho districts have the highest average asking rent at 30,000 yen per tsubo for the third quarter of last year, which is higher than the average of Tokyo?s central five wards for the same period.
The company has also reportedly closed a deal for the 23-story commercial building in San Francisco, a move which is said to be part of their plan to increase operating profit outside Japan to account for 20% of total by March 2021. Sugiyama added that the company will turn its focus on acquiring their own properties and consider mergers and acquisitions as well as buying REITs that own good properties in the coming months.
Since logistics is gaining more attention in Japan, Mitsubishi Estate is currently developing logistics facilities in Tokyo. In fact, there are already two warehouses for storage and distribution operations to be developed in association with major partners in Tokyo Bay and Kanagawa Prefecture.
Original Article: Bloomberg Businessweek Photo credits:REGUSmedia via Flickr Creative CommonsTokyo Apartments For Sale | Tokyo Apartments For Rent | Real Estate Japan
Source: http://www.realestate.co.jp/2012/10/01/mitsubishi-estate-to-increase-rents-in-2013/
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