May 29, 2020
Episode 11 - Consumer behavior and real estate investment - Will the spread of telecommuting affect real estate investment?

There are many companies in Japan that have switched to remote work in response to the coronavirus, there was also a lot of discussion about telecommuting even before this crisis. Will work style reforms in Japan have an impact on real estate investment in the same manner as the spread of smartphones triggered a spread in e-commerce that increased the asset value of logistics properties? We will touch on this theme in this episode.


The rate of telework adoption by companies in the US was said to be 85% as of 2015, and reasons behind this that have been mentioned include not only the diversification of working styles, but also the reduction of office space costs. Even if it would have resulted in a cost reduction in the case of a building owned by such a company, there may have been some risks for rental office owners including downward pressure on floor space needs given that fewer people would work in offices due to the expansion of telecommuting.


Meanwhile, in Japan, many people expect for there to be a considerable increase in telework going forward due to the spread of the coronavirus. Although the percentage of hired workers engaged in telework was still low at 14.8% as of 2019, it has become known that at least 50% of these workers work at satellite offices.


Telewok population













*Figure prepared by International Interface based on an excerpt from the “Telework Population Factual Investigation” (FY2019) from the Ministry of Land, Infrastructure, Transport and Tourism


Satellite offices are increasingly being discussed in the context of real estate investment from the perspective of changing office demand. It is also clear that many office building owners who are investors have recently focused on the satisfaction of tenants in the buildings they invest in. Office building owners who previously assumed customer satisfaction for general companies as a tenant target up until now may increasingly target companies that specialize in operating shared offices (rental offices).


When people hear of the expansion of telecommuting, they may think that there are diminishing needs in Tokyo. However, according to our outlook, the need for offices in Tokyo won't diminish so easily.


In fact, as of 2015, Tokyo accounted for 35.7% of the dedicated telework facilities of the 47 prefectures in Japan, and the commercial strategy following this for the surrounding areas is expected to continue.


The office vacancy rate in Tokyo is on a downward trend, with only a very small percentage of vacancies, and the situation is very good. Nonetheless, people do raise doubts as to how long this good situation can continue and as to whether it’s just some areas that this situation can be maintained in.  Considering the high latent and overt potential of Tokyo as a metropolis, we believe that even if the form of the Tokyo office building market changes, it is certain that there will continue to be needs.  The fact that clients from all over the world contact us on a regular basis makes us realize the high potential of Tokyo every day.



* 2018 White Paper on Information and Communications in JapanSustainable Growth Through ICT in an Era of Population Declineby Ministry of Economy, Trade and Industry

* Ministry of Internal Affairs and Communications Telework Information Website

* Report on teleworking population research 2019 by Ministry of Land, Infrastructure, Transport and Tourism

*2019 survey questionnaire of ESG real estate assessment conducted by the Ministry of Land, Infrastructure, Transport and Tourism

* Study group information on supporting Work Style Reform prepared by the Ministry of Land, Infrastructure, Transport and Tourism 

* Telework Center Booklet by the Ministry of Land, Infrastructure, Transport and Tourism


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