The Real Estate Companies Association of Japan

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REAL ESTATE in Japan

Office Building (Urban Redevelopment)

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  • History of Office Building Development

The history of office buildings in Japan is said to have begun in the Meiji period. The completion of Mitsubishi Ichigokan and red brick Western style buildings at both ends of Babasakimon Road heralded the creation of the first Western style business avenue. In 1914, the Mitsubishi Nijyuichigokan, full of modern facilities, was completed, marking the beginning of the dedicated building leasing business.

The Marunouchi Building was completed in 1923 and the importance of the earthquake and fire resistant architecture symbolized by the Marunouchi Building began to be recognized after the Great Kanto Earthquake. Although many rental buildings burned and were lost during the awful events of World War II (1941- 1945), the full-fledged construction of rental buildings took off with the recovery beginning in 1950 after derequisition of the buildings remaining from the war and revision of the Rent Control Act.

In the early 1950s, some of the buildings whose construction had begun during the war but had been suspended or that had been started after the war were completed, but it was in the late 1950s that the first building boom occurred, against the backdrop of the post-Korean War Jinmu Economy. Although banks’ assessment of the real estate industry was poor, and the procurement of funds remained difficult, the building business took off as the system of Construction Cooperation Funds— via which funds for construction were obtained from companies that planned to enter buildings as tenants once they were completed— became commonplace.

  • Progress in Urban Redevelopment

There was booming building demand resulting from the high growth period beginning in 1955 and the rental building market has developed remarkably as a result of responding to this demand. Throughout the late 1950s and early 1960s, a number of Mitsubishi Estate buildings were completed as well as a series of company buildings for financial institutions and newspapers located on national land they had been granted, forming most of the Tokyo business district covering Yurakucho, Marunouchi, and Otemachi.

There was a dramatic relaxing of regulations limiting building heights thanks to the creation of the Specified Blocks System* in 1961 and the introduction of FAR Regulations* in 1963. Between the 1960s and early 1970s, various systems were established for securing a good city environment and attracting superior architecture and developments. These included the establishment of the New City Planning Law in 1968 and City Redevelopment Law in 1969. Private companies took advantage of the opportunities presented by these developments to embark on large redevelopment projects.* Simultaneously designated as the first special urban block in 1964, Tokyo’s Tokiwabashi Redevelopment (Nippon Building, etc.) and Kasumigaseki Building were completed one after another in 1968. At the time, they were respectively the largest super high-rise buildings in the East. Also in 1968, the preparation of infrastructure on the former site of Tokyo’s Yodobashi Water Purification Plant was completed, the land was sold to the private sector, and construction of Shinjuku’s new downtown area of skyscrapers began.

Upon entering the mid-1970s, there was a slowdown in the concentration of industries and people in major cities, and the building boom also calmed down. On the other hand, high-quality developments worthy of being called “town creation” projects began to be conducted utilizing a new business system. One project representative of this is the Ark Hills project in Minato Ward, Tokyo, that was completed in 1986. In addition, Hibiya City, consisting of four buildings, was completed in 1981 on two specified blocks that were the former site of NHK. This project is well known as a project in which air rights* were sold within the specified blocks.

  • The Bursting of the Bubble and Promotion of “Urban Regeneration”

Between the late 1980s and the early 1990s there was an unprecedented development boom backed by the spread of information technology and the emergence of Tokyo as an international finance center. Companies not traditionally involved in development entered the building business and triggered the soaring land prices that became known as the bubble. On the other hand, during this ten-year period many mega projects that had been conducted over a prolonged period began to appear. Examples of these include Makuhari in Chiba Prefecture, Minato Mirai 21 in Yokohama, Osaka Business Park (OBP) and Yokohama Business Park (YBP).

After the collapse of the bubble, the proactive promotion of urban redevelopment projects by private companies as measures to invigorate the country’s economy, which was mired in a continuing slump, had large expectations placed on it. Redevelopment projects have a very high ripple effect on the economy and greatly contribute to economic recovery through an expansion of domestic demand.

In 2002, through the establishment of the Act on Special Measures Concerning Urban Renaissance, urgent urban regeneration districts began. These are critical and important districts designated by the central government as bases for urban regeneration for city lots that should be developed. This paved the way for sale of land by the JNR Settlement Corporation and after that, large-scale redevelopments in Shiodome, Shinagawa, Roppongi, and elsewhere have been since undertaken, and an enormous number of large office buildings supplied. Through private company-based urban regeneration, many of the buildings in these areas have built multi-use developments that are not just office buildings but also include functions such as hotels, commercial facilities and theaters, developing public facilities to help solve various social issues and improve the disaster preparedness capabilities of cities.

On the other hand, the need was recognized for so-called “compact cities,” compact urban development to maintain local dynamism while facilitating comfortable life by guaranteeing government services, healthcare, welfare, commerce and other functions amid the declining population, falling birthrate, and aging of society, so efforts are underway such as the inclusion of the Location Optimization Plan System in the revised Act on Special Measures Concerning Urban Renaissance enacted in August 2014.

  • International Competitiveness of Cities

Because of economic globalization, the industrial global competitiveness of cities has become a national development focus. In order to compete effectively with major world cities such as New York, London and other Asian cities, whose progress has been remarkable, it is necessary for Japan’s cities to look ahead and build appealing districts that will attract international talent, capital, and information.

In 2011, the Act on Special Measures Concerning Urban Renaissance was partially revised, and the specific urban redevelopment urgent development area system was set up designating regions where strengthening global competitiveness would be particularly effective as “specific urban redevelopment urgent development areas,” and a Comprehensive Special Zone system was set up via the Comprehensive Special Zone Act. Furthermore, the National Strategic Special Zones Act was enacted in 2013, based on the objective of promoting the development of international economic activity hubs, and efforts are being made to enhance the international competitiveness of cities.

Related section: Internationalization

  • Recent Office Building/Urban Development

In addition, in order to improve the disaster preparedness capabilities of cities, an increasing number of buildings have BCP functions such as advanced earthquake-resistant or seismically-isolated structures and emergency generators, and are designed to take in stranded commuters.

As new technologies such as IoT make remarkable progress and come to be seen as pillars of the country's growth strategy, in order to respond to society’s dramatically changing needs, efforts and demonstration experiments are underway to utilize these new technologies in urban development, as well as efforts to realize smart cities not only with new technologies but environmental, energy and other measures.

Also, as work-style reform and open innovation to increase productivity make progress, various types of offices such as incubation offices, satellite offices and co-working spaces are emerging in response to diversifying workplace needs

Related section: Environment/Energy, Disaster preparedness and Area Management

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