APAC-BFSI-Outlook-2017

MARKET OVERVIEW TOKYO BANKING AND FINANCIAL SECTOR SUMMARY

114.28

6.2%

NA

Prime Rent (USD/Sf/Year)

Rent Growth (YOY in local)

% Occupancy of Financial Sector

Banking and Financial Sector Trends The financial sector in Japan has been healthy during and after the global financial crisis (GFC), unlike the financial sectors of other nations. Backed by the recent economic recovery associated with the stock market improvement over the past few years, most local banks and securities firms have increased headcount. On the other hand, foreign firms have become less active after the GFC. Most recently, Citigroup shrank its exposure, selling its retail banking operations to Sumitomo Mitsui Banking Corporation, and its credit card service business to Sumitomo Mitsui Trust Bank Japan in 2015. Major local banks and securities firms normally own their headquarters in prime locations of the Otemachi/ Marunouchi area, while other local institutions and foreign companies often lease their premises. Recently, we have seen a ‘flight to quality’ among occupiers as some companies have moved to better buildings in superior locations to suit their business continuity planning needs.

Outlook, Opportunities & Strategies for Occupiers The introduction of negative interest rates in early 2016 has impacted the financial performance of banks, and may lead to weaker oŸce demand going forward. Given that the current vacancy rate is below 5.0%, securing new oŸce spaces with a wider floorplate in the Central Business District (CBD) market has become more diŸcult. Tenants continue to prefer flexible terms, including space reduction and early termination, when signing contracts. In line with the outlook and focus on cost reductions for many foreign financial firms, we are seeing many multi-national occupiers in the finance sector seek ways to reduce total occupancy costs, whether through seeking possible sublease opportunities in their fixed term leases, or space planning initiatives driven by mandates to reduce footprints. Given their previously healthy conditions, local financial firms have not been as aggressive on the above measures; however, they may adopt a “wait and see” stance as a result of ongoing monetary policy initiatives and associated cost pressures. - Leon Ikeda, Senior Manager, Tenant Advisory Group Japan

Key Banking and Financial Services Sector Lease Transactions – 2016 PROPERTY SF TENANT

TRANSACTION TYPE SUBMARKET

Mitsubishi UFJ Morgan Stanley Securities

Otemachi, Chiyoda-ku

Otemachi Financial City Grand Cube 310,200

Lease

Sophia Tower

142,300 Aozora Bank

Lease

Yotsuya, Shinjuku-ku

Sumitomo Fudosan Shinjuku Garden Tower

Takadanobaba, Shinjuku-ku

106,700 JCB

Lease

Ginza Mitsui Building

90,000 JA Mitsui Leasing

Lease

Ginza, Chuo-ku

Tri-Seven Roppongi

55,000 Fidelity Japan Holdings

Lease

Roppongi, Minato-ku

Tokyo Garden Terrace Kioicho Kioi Tower

106,000 MetLife Inc.

Lease

Akasaka, Minato-ku

Key Banking and Financial Services Sector Sale Transactions – 2014/2016 PROPERTY SF BUYER PRICE (US$ MIL) PRICE (US$/SF)

SUBMARKET

Otemachi Tower (30% of oŸce portion) Former Mizuho Bank Headquarters Building

368,140 Mizuho Bank

1,733

4,707

Otemachi, Chiyoda-ku

Mizuho Financial Group

797,510

1,390

1,743

Marunouchi, Chiyoda-ku

48 ASIA PACIFIC BFSI OUTLOOK 2017