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Investor Presentaiton

JPR Office Rental Market Conditions Secondary vacancies, etc. can be seen due to the impact of new supply in 2012 but a moderate recovery is anticipated due to robust new demand Changes in Average Vacancy Rates of Tokyo Office Buildings Although vacancy rates were trending upward due to the impact of large supply in 2012, the trend was turned around and rates have been falling moderately supported by robust tenant demand for newly-built buildings, etc. Supply and New Demand Trends of Tokyo Office Buildings (1) Large supply in 2012 is focused in the first half and supply in the second half is expected to remain at about 1/3 of the first half (%) 10.0 (%) 60 (thousand tsubo) 60 Average vacancy rate (left axis) Vacancy rate of existing buildings (left axis) Vacancy rate of newly-built buildings (right axis) 50 50 9.4 9.4 9.5 40 9.3 9.2 9.2 9.2 40 40 30 9.0 9.0 39.2 8.9 35.7 36.4 20 9.0 33.8 33.6 30 20 8.8 8.8 23.7 32.5 21.7 8.7 22.3 29.1 10 204 20 17.2 8.7 8.7 0 8.5 8.6 8.6 8.6 8.6 8.6 8.6 8.5 8.49 10 -10 8.4 8.44 8.42 8.45 New demand in the past year was robust at approx. 140,000 tsubos (%) 10.0 Newly supplied space (left axis). Average vacancy rate (right axis) Actual figures ← Newly demanded space (left axis). → Forecasts 9.5 9.0 8.5 0.0 [1st half of 2012] [2nd half of 2012] -20 0 0.0 Jun. 2011 Aug Sep. Oct. Nov. Dec. Jan. 2012 Feb. Mar. Apr. May Jun. Jul. (Note) Actual figures were prepared by Tokyo Realty Investment Management, Inc. based on the Office Report (in Tokyo CBDs) published by Miki Shoji Co., Ltd. Supply and New Demand Trends of Tokyo Office Buildings (2) New supply in 2012 and after will continue at a certain level, but the net increase in leasable space estimated from the volume extinguished will likely remain low compared to the volume of new supply, and will have only limited impact on the market (thousand tsubo) 400 Newly supplied space (left axis) Newly demanded space (left axis) 350 300 250 200 150 100 50 0 I Net increase in leasable space (left axis) Vacancy rate (right axis) (%) 12.0 Actual figures: Forecasts 10.5 (Actual figures of July 2012) 9.0 Average volume 7.5 extinguished over past 5 years (left axis) (Estimate) 6.0 4.5 3.0 (Actual as of July 2012) 1.5 0.0 -50 -100 Aug. Sep. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sep. Oct. Nov. Dec. 2011 2012 (Note) Data through July 2012 was prepared by Tokyo Realty Investment Management, Inc. based on the Office Report (Tokyo CBD) published by Miki Shoji Co., Ltd. Data for August 2012 and after were prepared by Tokyo Realty Investment Management, Inc. based on its own survey. Views on the Market by an Independent Institution (Office Buildings in Tokyo) Outlook of Office Market in the 23 Wards of Tokyo ■In 2012 large-scale buildings will generally be completed as scheduled and will have large supply of 302,000 tsubos ■Companies that are viewing rents to be close to the bottom price are starting to move toward relocating to reduce costs as well as to improve location and grade Although the European debt crisis will put downward pressure on the economy, demand for recovery from the Great East Japan Earthquake will support the economy, and the volume of new demand in 2012 will be a relatively sizeable 218,000 tsubos As absorption of large supply in 2012 will be difficult, the vacancy rate is forecast to remain generally flat at 7.4% ■The vacancy rate continues to remain high but the downward pressure is becoming relaxed as average contract rents have already been significantly adjusted and tenant relocations are becoming more active ■Volume of new supply in 2013 will shrink to 109,000 tsubos as a rebound to the large supply, and the vacancy rate which has remained high for some time will finally head toward a decrease, and it is expected to continue decreasing in 2014 also ■Average contract rent will remain stagnant during 2013 where the after effect of the large supply will still linger, and is expected to begin increasing starting from 2014 when the vacancy rate will start to show a clear decreasing trend -150 2009 2001 2002 2003 2004 2005 2006 2007 2008 2010 2011 2012 2013 (Note) Data through July 2011 was prepared by Tokyo Realty Investment Management, Inc. based on the Office Report (Tokyo CBD) published by Miki Shoji Co., Ltd. Data for August 2012 and after were prepared by Tokyo Realty Investment Management, Inc. based on its own survey. Japan Prime Realty Investment Corporation 2014 201 (Note) Prepared by Tokyo Realty Investment Management, Inc. based on the Real Estate Market Research Report (surveyed in Apr. 2012) by Sumitomo Mitsui Trust Research Institute Co., Ltd. 23
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