TE Capital, Tokyo Trust Complete Central Tokyo Office Buy as Local Rents Surge

Singapore-based private equity firm TE Capital Partners and its Tokyo Trust Capital affiliate have completed their acquisition of a newly built office building in Tokyo’s central Chuo ward.

The 12-storey tower, called Owns Hatchobori, provides 4,200 square metres (45,208 square feet) of gross floor area directly opposite Hatchobori railway station and one train stop from the main Tokyo Station, the companies said Tuesday in a release. The investment in the property, first announced one year ago, was made on behalf of TE Capital’s TE Value Partners fund series, with Tokyo Trust acting as the onshore asset manager.

Financial details of the transaction weren’t revealed. The deal’s closing comes as average Grade A rents in Chuo ward surged 12.4 percent year-on-year in the third quarter to JPY 36,229 ($238) per tsubo (3.3 square metres) per month, according to the latest office leasing report from Savills. Vacancy in the ward dipped 2.9 points year-on-year to 2.4 percent, marking eight straight quarters of improvement.

“The Tokyo office market remains one of the most resilient in Asia, characterised by low vacancy rates and a sustained occupier flight to quality,” the companies said. “Benefiting from these market dynamics, Owns Hatchobori is well positioned to attract both domestic and international tenants seeking modern, efficient office space in the heart of central Tokyo.”

Leasing Launched

Completed by NTT Urban Development Corp in July of this year, Owns Hatchobori offers 3.4 metre (11.2 foot) floor-to-ceiling heights, open-air terraces and dedicated “third spaces” on each level, according to Tuesday’s announcement.

The new owners touted the building’s five-star ZEB rating under Japan’s sustainability framework and its connections to mass transit, with the five key train lines of Ginza, Hibiya, Yurakucho, Asakusa and Tozai all accessible within an eight-minute walk.

“TE Capital Partners and Tokyo Trust Capital have commenced leasing activities for the asset, which is expected to draw strong interest from corporate occupiers prioritising connectivity, sustainability, and a future-proof workspace,” the companies said.

The acquisition gives Singapore-based TE Capital a foothold in one of Asia’s healthiest office markets, with average Grade A rents in Tokyo’s central five wards having jumped 3.2 percent on a quarterly basis and 10.8 percent year-on-year in Q3, according to Savills. Average Grade A vacancy across the wards fell 0.8 points from the previous quarter to reach 0.7 percent.

“Despite the improvement across most wards, the average vacancy remains slightly above pre-pandemic ultra-low levels,” the consultancy said.

Osaka Retail Bet

The update on Owns Hatchobori follows last week’s news that Tokyo Trust had acquired a high street property in Osaka’s Shinsaibashi-suji shopping arcade for an undisclosed sum.

The company part-owned by the family office of Mori Trust chairman Akira Mori purchased the Shinsaibashi Prosper Building, which measures 3,160 square metres (34,000 square feet) of gross floor area, on behalf of domestic Japanese investors for around $47,458 per square metre, according to market analysts.

Tokyo Trust ramped up its capabilities in 2023 with the hiring of former BlackRock and GE Capital executive Christopher Handte as managing director, with the graduate of Princeton and the University of Pennsylvania’s Wharton School later promoted to chief executive last year.