Apple plans to take one or two floors in the office tower at Roppongi Hills, a $2.2 billion development owned by Mori Building Co., Japan’s biggest closely held developer, according to the people, who declined to be identified because the information hasn’t been made public.
Office rents for Tokyo’s central five wards have been declining since the global financial crisis in 2008, according to Miki Shoji Co., an office brokerage company. They fell to a record low of 16,572 yen ($185) per tsubo in December, the broker said. A tsubo, the standard measure of property in Japan, is 3.3 square meters, or 35.5 square feet.
“Rents of large office buildings in central Tokyo peaked in the second quarter of 2008 and have fallen 40 percent from the peak,” Kayoko Hirao, the head of Japan research at DTZ Research in Tokyo, said in a phone interview today. “It is a good time to consider an office relocation to the central business area and it should be a good chance for Apple. The office rental market will recover this year.”
The 54-story office building at Roppongi Hills is home to Goldman Sachs Group Inc. and Barclays Plc. The complex, located in one of Tokyo’s most-famous nightclub districts, includes a Grand Hyatt hotel, an office tower, apartment buildings, an art museum and a private club.
The Cupertino, California-based company informed its landlords at the Tokyo Opera City Tower, and the current lease will be terminated by the end of June, one of the people said. Owners of the building include Japan Real Estate Investment Corp. and NTT Urban Development Corp.
Takashi Takebayashi, a Tokyo-based spokesman for Apple, Hideki Nomura, general manager of the public relations department at Mori Building, and Daisuke Tominaga, a manager at Tokyo Opera City Tower, declined to comment on Apple’s move.
The decline in Tokyo office rents has seen more companies relocating as they seek to upgrade office space after the March 2011 earthquake. Morgan Stanley said last month it signed an office lease with Mitsubishi Estate Co. to move its Japan operations back to Tokyo’s Otemachi business district amid “attractive conditions for tenants of prime commercial locations.”
Tiremaker Bridgestone Corp., currently located in a 61-year-old building near the Tokyo station, said it plans to move into a brand new building in the same area to be completed in January 2014.
Rents for prime office space in Tokyo have fallen by about half since the peak in 2008, according to a presentation material slide by property broker Jones Lang LaSalle Inc.
The rental value in the Akasaka and Roppongi areas, where Apple is moving to, is 46 percent of the peak, according to Jones Lang. That has attracted new tenants, pushing the vacancy rate in the area to 2.7 percent as of September from 9.3 percent a year earlier, it showed.
Apple, which also makes iPads, posted the slowest profit growth since 2003 and the weakest sales increase in 14 quarters, the company said earlier this week. Profit rose less than 1 percent to $13.1 billion in the period that ended Dec. 29, while sales rose 18 percent.
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