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A pioneering style of business succession among restaurant tenants

One-day bar master

Business-tenants grow older along with the buildings they work in. Ideally, the businesses they run should be handed over in a timely manner. Unfortunately, most restaurants and the like are forced to close when their operators retire, as they fail to groom successors.
Indeed, such a handover process from elder to newer business-tenants is essential for a viable building-rental business. How frustrating it is to see a building abandoned when shops close, with their rich social network and know-how being squandered!

1. The woes of tenants

Younger business-tenants can work hard to keep on paying monthly rent. But as they grow older, they hit their physical limits and find it harder to serve even a decreasing number of clients. Many departing business-tenants feel chagrined because they could have afforded to stay in business if they had had an option to use the space only for half-a-month or just a few days a week. Thus, there are not many options left when they face losing their livelihood.

2. The headaches of building owners

Building owners used to regard the withdrawal of business-tenants as an obvious option when they could not afford monthly rent. But things have changed with the decline of the restaurant industry. Owners must endlessly look for replacements as new business-tenants struggle in their business and end up leaving their buildings.

3. A win-win solution

Arguably, the building-rental business has a special social role in helping former tenants pass along their clients and know-how to new tenants to spare them trouble in starting-up a business. In this way, former business-tenants may not only earn some money for their retirement, but also help preserve what they have achieved with their business and something to live for.

Yokosuka Group has taken the lead by introducing a one-day bar master system at our Enisi bar and lounge so that veteran bar masters who have left Ginza in tears can shine again by working with junior staff once a week or once a month.

Bars usually are packed when former bar masters appear on that one special day as “stars” who do their best in attracting clients. The extra sales above the target level are divided between the one-day master and building owner. Increased profits aside, successful one-day masters can pass on tips to fledging masters and help building owners to tap into their social network and business know-how.

Such a new style of business succession is being tested at Yokosuka Building to gracefully adapt to demographic decline.

Written by Hiroshi Yokosuka and Tatsuo Hayashi

TPP and new business opportunities in Japan

The broad agreement reached on Trans-Pacific Partnership offers unprecedented opportunities for business and property investment in Japan. A wave of new business startups from member countries will defy the pessimism claiming that Abenomics is losing steam and that the depreciation of the yen has stalled.

Indeed, the obvious beneficiary of the TPP is the United States as the top exporter of services in the world (30% of the country’s export). But it is only a matter of time before investors and entrepreneurs from Asia and Europe will find a new business frontier in Japan, as well.

As a matter of fact, the EU is now in a hurry to reach agreement on the Economic Partnership Agreement this year, lest it lose the Japanese market to TPP members that amount to 36% of global GDP. This strikes a contrast with the EU’s earlier indifference when the TPP negotiations were deadlocked.

If the negotiation on the Regional Comprehensive Economic Partnership can be concluded this year with China, India, and the ASEAN nations, the TPP will be followed by two mega free-trade agreements which respectively account for 30% of the world’s GDP.

The TPP abolishes tariffs on telecommunication, software, entertainment, and other digital contents. According to the TPP cross-border service obligations, online and other services will be guaranteed equal treatment with those provided by Japanese companies. E-commerce now can access the Japanese market even without placing computer infrastructure in Japan.

Subject to certain conditions, relaxed restrictions and a more open qualification system in Japan will enable foreign professionals to provide, e.g., legal, accounting, engineering, architecture, and research and development services. Full mutual recognition of qualification is yet to take place, but there is no doubt that professionals who know the systems of respective member countries will join forces to further open up the Japanese market to the world. Spouses of certain business persons will also benefit from the right to work in Japan and stay there for the same period.

Until recently, foreign investors have been scared away from the Japanese real estate market by unclear Japanese business practice and regulations, as well as insufficient information. These barriers are about to start disappearing. As a matter of fact, depopulation in Japan is translating into a surplus of properties. Unless owners welcome foreigners, their offices, hotels, and many other spaces will remain vacant. As such, matter have gone beyond lifting the ban on the use of private housing as guest houses;. Indeed, private lodging is being encouraged in the run up to the Tokyo Olympics as a way to effectively using vacant space.

Express delivery service will be encouraged by faster custom procedures, which in return will underpin both a more international supply chain and vibrant e-commerce. Efficient logistics will drive the advance of foreign retailers into Japan. Franchisers targeting the Japanese market are also under full sail thanks to protection of their concepts and trademarks.

How to set up a business in Japan?

The necessary steps involving foreign startups are, in sequence: 1) foreign resident registration, 2) seal registration, 3) office rental, 4) establishment of a Japanese branch or company, 5) filing tax documents, 6) visa application for the representative and employees, 7) recruitment of Japanese employees, 8) subscription to public insurance, 9) payroll calculation, 10) licensing, 11) account booking, and 12) tax filing . The entire procedure will take at least 30 days. When you enter Japan with a short-term stay visa (granted on arrival for most nationalities), make sure to act swiftly to complete all the steps within 90 days.

Some contents business can operate from a home country without renting an office in Japan. In other businesses, however, foreigners must secure a “place of business” in order to prove their continued business presence in Japan. This is necessary both for the application for an investor/business visa and establishment of a company.

Be careful to avoid rental agreements for properties designated for residential purpose, or you will need to go through additional paper work and hassles. Because of the visa application requirement, you may be surprised to rent an office first as a private person then later on your company name.

Therefore, the key is to find a flexible owner of a rental office. TSO perfectly understands the challenges encountered by foreign businesspersons. You can register your business at our rental office even with a short-term stay visa (equivalent of a tourist visa). Our group partner offers free accounting consultation and special discounts for you to have a head-start in Japan.

Based on our rich experience, the TSO team will be glad to help you with any questions related to rental offices and real estate in general.

(The article was first published on the TSO blog)

Why Bother to Invest in Japan Now? – A Nuanced Approach to the Asian Market

“We are in the Asian century, and the era of Africa is dawning. Why bother with hassles and the peculiar language and business practices in ageing Japan? Learn Mandarin or Swahili and don’t miss out on the next gold rush!”

Naturally, many business startups are racing to growing continental markets, with India and ASEAN being expected to overtake Japan in GDP. Some enthusiasts even foresee the emergence of an Asian market 20 to 30 times the size of Japan. But does jumping on the bandwagon and rushing off to Singapore or Hong Kong promise any success?

Please don’t take us wrong. It is indeed wonderful to see Asians and Africans escape poverty and strive toward prosperity through business. Entrepreneurs really should visit those countries and get a personal feel for the dynamic energy there. As a matter of fact, aspiring Japanese companies themselves are flocking into Asian markets and some have already begun M&A and investment in startups with deep local roots.

Following Confucius, in Asia they say: “If you are planning for a year, sow rice. If you are planning for a decade, plant trees. If you are planning for a lifetime, educate people”. So the question is whether you just want to sow rice or accomplish something greater.

Japan as a strategic base for eyeing the global market
Careful observers will notice the new business potential of Japan today in a very different way than back in the go-go 1980s during the run-up to the asset bubble. In fact, Japan is one of the best vantage points for global business operations in Asia’s emerging markets.

Surprisingly or not, Tokyo is home to the third largest number of companies listed on the Fortune Global 500, after the United States and China. Moreover, Japanese manufacturers like Panasonic, Honda, Toyota, and Nissan are accelerating the reshoring of their production back to Japan, convinced that this move actually reinforces their competitive advantage. In defiance of the protracted TPP negotiation, foreign manufacturers are also building up their manufacturing bases in Japan.

The reasons are not simply the rising labor costs in China or the weakening of the yen that had lasted until the recent reversal. Until recently, attention had been confined to the limitations of the Japanese economy. Fortunately, deregulation of retail markets, corporate tax cuts, and other genuine reforms are making a lasting impact in rising real wages and the steady recovery of the Japanese economy from its deflationary spiral.

Refined markets for bolstering your brand
Top brands in the world acknowledge the fact that they cannot lead the global market without succeeding in Japan. To put it bluntly, a blessing from the demanding and refined consumers in Japan promises acceptance from most consumers in the world. Naturally, international brands compete to open shops along the streets of Omotesando, Aoyama-dori, and Meiji-dori. The wealthy individuals and investors around the world are on a buying spree with real estate in Ginza as a home for leading Japanese brands and Roppongi as a favorite district of foreigners. Considering the low return of some of these properties, they are clearly investing in Japan as the launch-pad for their brands.

Many foreign companies are also striving to incorporate the fashion and taste of Japanese into their products, because they become also popular in Thailand, Indonesia, and so forth. The power of Japanese taste is not limited to fashion. Dollar-shops called hyakuen-shops are all-time favorite spots for Asians, Westerners, and other foreign guests alike. In barely restrained excitement, they say: “How wonderful to be able to enjoy that quality and practicality for that price!”

The attractiveness of Japanese quality often causes surprising trouble. Chinese tourists are snapping up so many nappies and rice cookers that shops end up limiting the purchase by each client and flights are delayed because of the trouble loading all the items purchased. With their newly acquired wealth, Asians head straight to Japan, the world’s shopping mall, where they can safely enjoy shopping without worrying about dishonest sellers or a foreigner price.

Despite the weakness in the overprotected agriculture sector in general, some aspiring agribusinesses are actually targeting the international market by exploiting the Japanese brand of safe and tasty food. The trend will accelerate as companies from different sectors freely compete to exploit consolidated and larger pieces of land.

Exploiting Japan’s innovation potential
China is expected to move up the supply chain in Asia from simple assembly to design and other advanced processes. But this tide is not necessarily pushing Japan to the margin of Asia. In absolute terms, Japan’s innovative capacity is intact. In fact, Lamborghini, L’Oreal, Bosch, 3M and other leading companies chose to establish their research centers in Japan, perhaps considering that the country maintains the top rank in the R&D budget per GDP, the highest ratio of researchers among the population, and in the number of Triadic patent applications (i.e., US, EU, and Japan). Japan is likely to underpin global strategies as a mature and reliable innovation base.

Staying a step ahead of market needs based in the leading ageing society
Japan faces an unprecedented challenge as the world’s fastest ageing country. But business is thriving in its efforts to provide solutions to the relevant problems. Many useful medical and health products that are unknown to the world can be found here in Japan where over a quarter of the population is aged 65 or more and more diapers are sold for adults than those for infants. Perhaps the ageing of the African continent may be long years ahead, but the rest of the world is bound to gray. Traditional business models that used to cater to young customers will become obsolete. Friendly competition with products and services enjoyed by Japan’s elderly will hone your leadership in the ageing global market.

Attractive business hub
The United Nations predicts that Tokyo will remain the world’s largest megalopolis, followed by Delhi and Shanghai. Information technologies have supposedly freed humans from the restraints of distance. On second look, however, clusters of creative people are proving ever more important. Perhaps that is why many world-class creators and artists have their bases in Tokyo.

Contrary to the stereotype as an expensive place, Tokyo offers office space for a third the price in Hong Kong and half that found in Singapore. Renting in Tokyo stands at 2/3 that of Shanghai and Seoul. In popular residential areas for foreigners, a rent is lower than in Hong Kong and Singapore and on a par with Shanghai.

The Japanese logistic system is more cost-efficient than that of Germany, France, the UK, and any other major countries of similar size. Likewise, the cost of the Internet is the least per unit of data. The Shinkansen bullet-trains that connect all corners of Japan have an average delay as little as 36 seconds per day in total. Foreign guests are impressed when there is an announcement to apologize for a minute of delay. Over the past 50 years, the Shinkansen never caused a fatal accident – although there has been an unfortunate suicide on the train.

In defiance of Japan’s stereotype as a reclusive nation, the inward FDI ratio is rising sharply and about to take over China’s top position – a clear proof of the incentives and investment environment that go beyond empty slogans.

Deep-rooted business investment as an important part of your life
Business investment is an important part of your life. And so it is only natural to decide your destination by taking the environment into account, as well. Investors in other destinations must ever breath contaminated air, hire chauffeurs or catch taxis to go anywhere, and must ever worry about kidnapping. These Asian cities are often flooded because of the underdeveloped drainage system. Many families dare not walk on the street alone and lead a stressful and confined life with fellow expats. Both foreigners and Japanese appreciate the safe, comfortable, and enjoyable environment that Japan provides for both the elderly and children. In 2015, Tokyo topped the MONOCLE’s most livable city ranking. For instance, you can simply walk to enjoy a tasty meal just around the corner. Tap water is potable. Roads are clean. There are wide choices of international schools and art galleries. If you want to enjoy your life with a long-standing business, rather than chasing after quick profits, Tokyo is a highly recommended destination.

A strategic hub that stands out in the era of Asia and Africa
Asia and Africa no doubt have great potential. As a matter of course, the growing market is so huge and diverse that the various regions warmly welcome entrepreneurs seeking success in Myanmar, Nigeria, China, India, Singapore, and Japan alike. At the same time, those who blindly follow the herd in deciding their destinations are doomed to fail. Only a few companies can cover the entire regions and they still need strategic focuses.

Japan, in particular Tokyo, is one of the promising strategic hubs for many business operations eyeing the extensive markets in Asia. Far from disappearing in a booming Asia, Japan will continue to play an important role as your reliable business partner.

Be Thrifty and Enjoy Japan Even More – Tips for Tourists and Business People

Photo Credits: Sakuyahime Project – http://sakuyahime.jp

“I dream of visiting Japan, but it must be expensive there…”

Such a stereotype may be true in certain circumstances – and indeed, some places can be more enjoyable with greater budget allowance. But fear not! It would be an absolute mistake to give up your trip to Japan. For the truth is that Japan today offers an unimaginable bargain both for foreign tourists and business people.

The TSO team is often asked by foreign entrepreneurs how to start business. We also advise our friends on how to enjoy trips in Japan on a shoestring. Here we share these tips to help you save on food, transportation, accommodation, sightseeing, and souvenirs. To make it simple, let’s assume an exchange rate of $1 = 120 yen, though the yen is getting weaker.

Japan: a country with great bargains

The reason for the surprising affordability of Japan is not just the weaker yen. Not only foreigners, but also many Japanese are discovering new ways to enjoy everyday life on the cheap. Although Abenomics has brought a respite from the prolonged deflationary recession, many services compete with one another to cater to Japanese who can afford less than before. As the domestic market is shrinking in line with demographic decline combined with rapid aging, companies are not only venturing outward, but also catering their services to foreigners in Japan. Indeed, the whole of Japan welcomes foreign guests with open arms.

Tokyo is particularly bustling with foreign visitors on treasure-hunting missions – including Asian group-shoppers in Ginza or Akihabra, as well as investors not only from the West, but also from the Middle East and Asia who are on shopping sprees for prime real estate.

Food

Food and transportation expenses tend to be the heaviest burden. But with our tips it is possible to enjoy tasty Japanese meals and spend no more than 1,500 yen ($12.5) per day – sometimes even 1,000 ($8.33) is enough. Always follow Japanese students and young professionals who know where to find decent, affordable franchised restaurants and local restaurants.

In Hanamaru Udon, the simplest small bowl of noodle udon costs as little as 130 yen ($1.08) – and the big serving costs 330 yen ($2.75). It may not satisfy a huge appetite, but a combination meal for 600 yen ($5) would definitely drive anyone’s hunger away. If you want to try slurping up soba noodle standing in a restaurant like the locals, Fujisoba offers the simplest soba noodle for 270 yen ($2.25) and the larger meat and noodle soba for 470 yen ($3.92), along with various topping options. A bowl of Gyudon beef with a salad come as a set for 400 yen ($3.33) in Yoshinoya. Try ramen noodle at Hidakaya for 390 yen ($3.25). And don’t miss gyoza dumplings for 220 yen ($1.83) and chahan/yakimeshi (fried rice) for 450 yen ($3.75).

The famed conveyor-belt sushi of Sushiro and other franchise bars charge you 100 yen ($0.83) for a pair of nigiri unless you go for luxurious toppings. A good choice for mingling with locals. Make sure to pile up your empty dishes on your own table, not on the piles of your neighbors. They will end up paying for you!

A very Japanese salaryman-style experience can be enjoyed in the evening in the street pubs of Omoide-Yokocho in Shinjuku or franchised pub like Watami.

Local treats, snacks, and soft drinks can be bought in supermarkets. Though slightly pricier, convenience stores are excellent places to kill your hunger by taking a bit on onigiri rice ball or rolls stuffed with unique Japanese tastes . At the moment, an 8% consumption tax (VAT) is added. But even so, this can be even cheaper than eating out the whole day in your country.

Transportation

Luckily, flights to Japan are getting cheaper. Narita Airport opened a third terminal completely dedicated to low-cost carriers mainly for Asian visitors. If you choose the off-peak seasons like New Year’s and summer vacation seasons, many cheap tickets are available from e.g., Turkish Airlines (from Europe) and Singapore Airlines (from the US West Coast).

Never get into a taxi just because you are so curious to see its automatic doors. Narita Airport is actually quite far from Tokyo, so take the Express train of Keisei Line that costs 1,280 yen ($10.7) to reach downtown Tokyo. Sure, Narita Express and Airport Limousine bus for around 3,000 yen ($25) are slightly more comfortable, but it takes about the same travel time.

From Haneda Airport, travel is shorter and cheaper – costing you 400-490 yen. If you can’t wait to start sightseeing, buy a one-day combination ticket for 1,310 yen, which will take you anywhere with the elaborate Tokyo Metro network after you take the Keikyu Line from the airport to Sengakuji Station.

For sightseeing in Tokyo over your next days, make the most of the Tokyo Metro’s 1-day open ticket for 600 yen.

There are two ways to cheaply travel around Japan. The first option is the budget overnight bus. With the Shinkansen, the trip from Tokyo to Kyoto or Osaka would normally cost you around 13,600 yen ($113). But the same trip can be made for 2,700 yen ($22.5) on an overnight bus with a restroom. Comfortably sleep on the bus and save accommodation cost. If you plan a long stay, Japan Railway Pass lets you ride most of the Shinkansen lines and all the trains of Japan Railways – and that covers all parts of Japan. The pass costing 29,110 yen ($243) for 7 days and 46,390 yen ($387) for 14 days must be bought in advance of your arrival to Japan.

Good news for families. Kids travel for half-fare on most public transportations.

Accommodation

Japanese capsule hotels are now famous, but they are still considered cramped and uncomfortable. Actually, a stay for a night or two is fun and comfortable, worth trying for 2,000-4,000 yen. Reservations are much cheaper through Japanese websites (example).

It is not very difficult to find business hotels offering Wi-Fi connections for 2,500 yen if you know a bit of Japanese. Foreigner-friendly business hotels are also affordable, like 3,600 yen per night at Kangaroo Hotel.

For families, a private apartment room is a way to save accommodation costs. Roomorama and other similar sites offer rooms for $20-50 per night. Crazy as it may seem, some travelers rent one base like this and enjoy day trips to different parts of Japan using their Japan Railway Pass and the Shinkansen.

Trusting young travelers participate in home exchange or enjoy Japanese country life as Whoofers.

Sightseeing

The best thing is to have a local friend who will gladly show you around. But there are similarly hospitable groups of volunteer tour guides throughout Japan. They find joy in communicating and making friends with foreigners. They will tell you about special spots usually visited only by locals, allowing you to experience Japan more deeply. Of course, let’s remember to reciprocate their kindness by covering their entrance fees and inviting them for lunch and dinner.

Shinto Wedding

Independent-minded travelers can also enjoy many spots for free. In Tokyo one of the best places is definitely Meiji-jingumae Station on the Tokyo Metro. In the Meiji Shrine you will see a Shinto-style wedding almost every 15 minutes during weekends. Interestingly, the shrine right nearby the youth-culture pilgrimage site called Harajuku and the fancy shopping street of Omotesando. The young also flock in the nearby Yoyogi Park, a fun place to have a picnic with a Japanese obento lunch box.

(Photo Credits: Goro Kuroita)

Trying out a multi-functional massage chair in Shinjuku or playing with a high-tech toilet in Akihabara are definitely fun. But, we recommend you visit Tsukiji’s fish market in the early morning. Though paid it is, if you need to take a shower after an overnight trip on a bus, try a Japanese public bath called sento, which is definitely a cultural experience you want to share with your friends.

Souvenirs

Traditional souvenirs from Kyoto, Asakusa, or the Oriental Bazaar in Omotesando are all-time favorites. But connoisseurs also remember to buy sharp ceramic knives, vacuum flasks, Heat-Tech (heat-generating underwear by UNIQLO), as well as high-tech lavatory seats called Washlet and rice cookers designed for use back in your home country.

Never miss 100-yen shops either. You may associate your local dollar shop with poor quality. But, please believe us, many foreign fans ask us to buy souvenirs from these Japanese dollar shops locally called hyakkin. Some even have three or four storeys, like the sort of Daiso on Takeshita Street of Harajuku. These neatly designed practical products, from kitchenware, food, and cloth, to electronic products like watches and mobile phone chargers, are mostly tagged at 100 yen ($0.83). These items are in fact made in China or other parts of Asia, yet they satisfy demanding customers both from abroad and Japan alike. In fact, it is not rare to note that more than half the customers on the same floor are foreigners. Buying one special gift for a special person is a lovely choice. Buying 100 neat gifts to 100 friends is also a nice way to share your memories of Japan.

Don’t miss out on a bargain!

I hope we have convinced you that being thrifty never means being petty and having no fun in Japan. The secret is to know where to save money wisely and where to make the most of it. Even on a limited budget, you’ll be able to have great fun and discover Japanese beauty off the beaten trail.

Through our rental offices TSO supports mainly foreign entrepreneurs in starting up their businesses in Japan. We will regularly post useful information, hoping that as many people as possible will discover the charm and potential of Japan. See you again on this blog – or better yet, here in Japan!

How Tokyo Synergy Office came into being

For almost half a century, Yokosuka Real Estate Appraisal Corporation has witnessed dramatic change in the real estate rental industry.

Once, a five-story building was regarded as a tall building. Today, we see forests of high-rise buildings with dozens of floors. The latest high-rise buildings attract the market’s apparent demand for numerous advantages, including beautifully designed common spaces; functional and hygienic air-conditioning, water, and sanitation systems; and energy-saving lighting.

Considering that the shrinking number of people in urban areas tend to flock to new high-rise buildings, the profitability of small- and middle-sized buildings is naturally expected to fall, which is only accelerated by their deterioration.

Due to our company’s long history, we own many such smaller “aging” buildings. In order to compete with the forests of the latest high-rise buildings, we also must be prepared for a tough war of attrition – that is to say, either merge them with their adjacent buildings into larger buildings or resort to a price war. Of course, such a war of attrition does not offer much hope for surviving the coming half century. Here are some challenges that can be pointed out in keeping up with the latest trend:

– The largest share of market demand for smaller offices is accounted for by individual entrepreneurs who are accompanied by one or two colleagues at most. The majority of them hail from the younger generations, who think that office space can be as small as the space for working at their computers. Some even say that it is enough to have a P.O. Box as a virtual office while they work in a coffee shop with internet, beverages, and a restroom

– Most of our buildings offered office space of around 80 m2 on each floor. Such a space costing as much as JPY 250,000 is either too small or too large for most clients. For that same money, they can rent a section (ca. 33 m2) in a high-rise building. Taking the equipment and the location also into consideration, these older buildings had no chance against newer, more attractive high-rise buildings.

– The office space of 80 m2 on each floor had only one bathroom to be used by both women and men. Considering the advance of women in the workplace, it would be a surprise to find such a “unisex toilet” in any new buildings. Our older buildings simply became relics of the earlier male-dominated labor market, which lacked due consideration for women.

– A few people starting up a business together tend to have little money and creditworthiness. They are not even sure if their business will take off. Traditionally complicated lease contracts add to their uncertainty by the extremely punishing conditions for both Japanese and foreign entrepreneurs. They are first greeted by having to pay a large sum as a security deposit, key money, guarantee deposit – and by an unnecessarily long lease term. A penalty charge awaits them if they dare to cancel the contract. Otherwise, they must pay renewal fees each time the contract term expires.

– On the one hand, the logic went: “It is impossible to achieve an agreement with foreigners who will be inevitably confused with unfriendly and complicated Japanese practice regarding rental offices. So, we’d rather focus on Japanese customers.” On the other hand, it was a big waste to exclude foreigners and foreign companies when our building is located in Hamamatsu-cho with convenient access to Haneda International Airport. Moreover, there is no hope for Japan to grow unless real estate agents try very hard to attract foreign companies into the country.

– Office sharing among several companies on one floor is increasingly popular because of the opportunities to exchange ideas with fellow entrepreneurs and reduced fixed cost thanks to the shared equipment and space. At times, though, they need to focus on their own job in their own rooms. So the shared office would be even more attractive if the shared spaces are combined with private spaces for working alone or holding a meeting.

– There are already rental offices that stress privacy as an advantage. Yet the provider of such rental offices tends to focus on an increased number of compartments resembling cells and minimized shared space to maximize their income from the rent. These offices look as barren as prisons. What a waste to confine entrepreneurs with diverse backgrounds into their cells without any mutual exchange, as if to say “who cares about neighbors”. For business startups, personal networks with other entrepreneurs and live information are extremely valuable. Such personal and live exchange can be hard to gain even with all the virtual networks via internet.

– Real estate agents today still engage in the rather simple business to “build and rent”. This is as close as the primary industry, in which farmers sell their own agricultural products. Such a simple business with an excess supply of buildings will sooner or later end up in the dead-end of a price war.

– The above analysis of the current business environment and of market needs brought us to the conclusion that real estate agents must take the initiative to comprehensively manage their offices in order to offer more sophisticated services. In other words, our business must be transformed into the third industry (or, the so-called “sixth industry” in Japan) to integrate services which to date have been provided by other types of businesses.

One way to achieve this was the increasingly popular “rental office business”. As a matter of fact, the world’s leading rental office companies have already advanced to Japan. We have also considered outsourcing rental office management. However, they charge a large amount in management fees and require building owners to cover most of the costs involved for remodeling the interior and operating the facilities. In addition, the management companies maximize their large profit margin by renting the addresses of “virtual offices” to a large number of clients.

This practice of renting a “virtual address” for a company that does not physically exist there is nothing more than a ruse, which is quite contrary to our management policy of building genuine trust above all. In fact, such offices tend to become a breeding ground for fraud. Police often inspect them. No matter how profitable that may be, we cannot encourage any type of rental office business that can harm others. This is why we decided not to enter into a contract with a major rental office operator.

Besides, outsourcing such a rental office business yielding a high value-added blows the chance to accumulate our own knowhow and profits. Committed to operating our real estate rental business for another half a century, we decided to find our own way step by step, no matter occasional failures and lessons learned.

This is how Tokyo Synergy Office came about .

Our office combines rental booths for concentrating on jobs and the common area for stimulating exchange among users with diverse industrial backgrounds. The restroom was of course divided into one for women and another for men. As to be expected, the office is equipped with the latest equipment and energy-saving air-conditioners, shared copier and shredder, desks, chairs, storage cabinets, and free internet connection. The security of the office is intact, as access to the office is controlled by card keys. There is no need to worry about arranging for a cleaning service on your own, either. Practically, business persons can focus only on their business from Day 1.

Our service is modeled on the business office services provided by hotels. Utmost business comfort is provided on the basis of a very simple and user-friendly agreement. Unlike the traditional lease contract in Japan, there is no need for customary payment of, for example, a security deposit, key money, and a renewal fee. Cancelation can be freely made with due advance notice. This is a revolutionary change.

We acknowledge that there are many lessons to be learned, starting with the fact that being too comfortable with doing things the old way leads to stagnation. Thus, in blazing a new trail, we will first strive to offer a new form of service at Tokyo Synergy Office in Hamamatsu-cho near Haneda International Airport. This service will attract both entrepreneurs and pioneering companies regardless of which country they come from.

Tatsuo Hayashi

Tatsuo Hayashi

Using prime real estate as your kitchen garden for free in downtown Tokyo

It has always been a yearning for the Japanese to own a piece of land. In fact, a house is often called “my dream home”. Meanwhile, housing and land are gradually becoming redundant as the stock of social overhead capital piles up against the aging population with fewer children.One logical answer would be to demolish or sell these vacant buildings. But human nature keeps people from selling special lands and homes left by their dear ancestors, as well as those filled with their own nostalgic childhood memories. This is why we often see vacant houses and vacant lots after old buildings have been demolished.

vacant spaces

vacant spaces

 

These vacant spaces are a common site not only in downtown Tokyo, but also in residential areas throughout Japan.

This photo is how a vacant spot in my neighborhood looked. Every time I passed by this vacant lot, the view discomforted me. But for years, I simply told myself that it was not my place to decide what should be done on land owned by someone else.

At some point, though, my conviction – wherever there is a problem, there is an opportunity – grew strong enough and I decided to do something about this situation.

In fact, I love gardening and have been enjoying planting vegetables and flowers on verandas in my apartment. My biggest struggle was having enough space –I had to resort to hanging plants from my verandas.

Searching for a solution, it dawned on me: “This vacant lot overrun with weeds is not being used by anyone, but apparently the soil is quite fertile. And it’s an ideal location for our kitchen garden if we just tidy it up!”

I then went a step further and put myself in the shoes of the land owner. Such an abandoned piece of land with uncontrolled weeds full of bugs can cause troubles to the neighbors and attract the occasional dumping of garbage. Clearing the weeds costs a lot each season, not to mention cleaning the road in front of the land. It did not take too much imagination to list the possible headaches all this could cause the owner.

 

after clearing the weeds

after clearing the weeds

A nice piece of land was discovered after clearing the weeds.

So, I found the owner family by using the public figure and land register and proposed a solution to the current condition – namely, I “manage” the land for free as a kitchen garden and thereby revive it as a “beloved space in the community” on their behalf.

This proposal was inspired by the tenet of Japanese merchants from the Omi region to seek “a win for everyone”, that is, to achieve a “win-win-win” among the seller, customer, and society, in line with the following reasoning:

– For any business to make sense, the seller must make a profit

– The customer must be happy with the deal and feel its benefit

– Every business is made possible thanks to the trust and support of the community. Therefore, the business must be made to develop the community and promote its welfare.

 

Though my proposal was not a business deal, the principle of “a win for everyone”, that is, a win for the owner family, a win for the user, and a win for the community, still played a crucial role in achieving an agreement:

– The owner family can save themselves the trouble and expense of clearing the weeds. As the land is always kept tidy and looked after by a trusted person as a kitchen garden, the family need not worry about litter, the disposal of weeds, the cleaning of the road in front of the land, and so on. Importantly, all the above are done for free.

– As a user, I can enjoy the use of prime real estate in downtown Tokyo as a kitchen garden. Of course, it requires effort to clear weeds and turn wild land into a nice kitchen garden. But for anyone like me with a pioneering spirit, building your “own farm” from scratch is an excellent way to fulfill your natural longings. For some, maintaining and managing a piece of land involves only onerous tasks. For born gardeners, however, cleaning the garden and then enjoying watching flowers grow is as natural as breathing air. Besides, we later have the real benefit of our own vegetables on the dinner table.

 

– The neighbors get to enjoy a better environment. The messy overgrown piece of land which only irked them before can now entertain them with flowers and vegetables that grow day by day. Because I committed to managing the property, I clean the road in front of the land. My relationship with the neighbors is only getting better thanks also to the shared harvest from this kitchen garden.

Now

Now

Every day, our daughter looks forward to playing in this kitchen garden and chasing after butterflies and picking strawberries…

To date, everybody is happy with this kitchen garden. Yet I must stress that shared interest in making a deal may not suffice to establish a relationship if the lender and the user have no  trust in each other’s sincerity. Unlike a formalist and businesslike land-lease agreement, our deal is based more on the kindness of the owner family, who let me “manage” the land. I believe that such users need to respect the owners’ emotional attachment with their dear homelands by committing to return the lands whenever the owners so wish.

In my specific experience, the agreement to achieve “a win for everyone” was reached primarily thanks to the generosity of the owner family, to my success in communicating my commitment to responsibly and dutifully manage the land on their behalf, and to the fact that such effort was a pleasure instead of a burden for me.

I encourage any aspiring gardeners with enough drive, energy, and sense of responsibility to go ahead and pioneer their own kitchen garden.

Actually, this is also the very goal of our Tokyo Synergy Office – to harness a win-win relationship between users and the provider for the benefit of society.

(Author: Tatsuo Hayashi, Tokyo Synergy Office)

The gap between the average rent and the actual rent received by landlords

Some owners of apartments and office buildings in downtown Tokyo complain that the amount they receive for rent does not increase, despite the rise in the going rental rate according to statistics. Indeed, statistical data may indicate that rent for apartments and office buildings in some areas of downtown Tokyo is on the rise, while rent for older buildings is steadily falling. No wonder that some landlords are disillusioned by these counterintuitive results.

Year after year the buildings owned by the landlords are deteriorating but they refer to the statistical data of the going rental rate for the market as a whole, where new buildings appear one after another. This misguided perception goes the furthest in explaining landlords’ disappointment with the thickness of their wallets.

Deteriorating and in time obsolete small- and medium-sized properties owned by typical landlords are eclipsed by the ceaseless entry into the market of new apartments and offices. Moreover, new buildings can no longer be compared with ones built a few decades ago, due to the impressive technological progress achieved over this period.

For instance, Washlet (electric toilet seats with water spray feature for washing) is provided in newly built apartments as a matter of course. There are air dryers in the bathroom and the floors dry quicker. The integrated kitchen systems often include disposers of organic waste. The cost of utilities can be reduced thanks to high-performance and energy-saving air-conditioners and LED, florescent bulbs, or other efficient lighting. Other subtle changes include intercoms with displays, improved sound-proofing performance of the floors and walls, and odor-neutralizing wall papers.

Such equipment and features cost money. In a sense, it is only natural for the rent of new properties to hover at a high level rather than falling, even when pulled down by economic slumps.

The very comparable quality of rental properties in the past may well justify the popular practice of equating the rent level that landowners should expect with the going rent in the area. But aside from their locations, buildings today have totally different equipment and functions. The price goes up and down by taking into account such differences. Therefore, the expectation of rising rent just by seeing the rising average price is farfetched at best.

Importantly, statistics can be taken in various manners, ones which produce differing implications

Some are based on fixed-point surveys of multiple buildings – others compile data only on relatively new properties, or extract buildings only above a certain scale. The phrase “going rental rate” can have completely different meanings. You may misread the current trend without exercising your imagination as to what kind of data are compiled and how they are corrected or rearranged when buildings are replaced.

(Author: Tatsuo Hayashi, Tokyo Synergy Office)