Executivesummary
Flexibleworkspace1 incentralNagoyahasexpandedsignificantlyashybridwork2 hastakenroot (Figure1).Post-COVID-19,officeworkers'inNagoyaareimplementingmorediverseworkstyles andremoteworkistakingrootincentralNagoya.Inordertoachievework-lifebalanceand improveproductivity,theneedformoreflexibleworkarrangementsisincreasing.
DemandforflexibleworkspaceincentralNagoyaisdiverseandisseennotonlyamongsmall andmedium-sizedenterprisesandstart-ups,butalsoamonglargecorporatessettinguplocal branches,satelliteoffices,andprojectspaces.Thesetrendsaremotivatingflexspaceoperators tolaunchnewlocationsofflexibleworkspacesincentralNagoya.
Asofthefourthquarterof2024,thetotalleasableareaofflexspaceinCentralNagoyais20,623 sqmandisup19%y-o-yfromtheprioryear,whichisfasterthan13%y-o-yriseinCentralOsaka, andnotablyhigherthanthe2%y-o-yincreaseofflexspaceinTokyo5-ku’ s.
CoworkingoperatorWeWorkopeneditsflagshiplocationinChukyoregioninJRCentralTower in2024anditisexpectedthatcommunity-orientedsharedofficesareexpectedtocatchupto servicedofficesinthesubmarket.
1 Flexible workspaces consist of serviced offices (shared workspaces with private offices) and coworking offices (communityorientedsharedoffices)
2Hybridworkisdefinedasawayofworkingthatincorporatesbothworkingattheheadquartersandconductingremotework
Figure1. FlexibleWorkspaceintheThreeMajorMetropolisAreasofJapan (asoffourthquarterof2024)
Source:JLL,OxfordEconomics,CabinetOffice,MinistryofInternalAffairsandCommunications
3CentralNagoyaconsistsofNakaWard,HigashiWard,NakamuraWard,andNishi Wards
4CentralTokyoconsistsofChiyoda-ku,Minato-ku,Chuo-ku,Shibuya-ku, andShinjuku-ku
5 CentralOsakaconsistsofKita-ku,Chuo-ku,Naniwa-ku,Nishi-ku, Yodogawa-ku
TheExpansion ofFlexible Workspace
Totalleasablefloorareaintheflexibleworkspacein centralNagoyawas20,623sqmasofthefourth quarterof2024andmorethandoubledfrompreCOVID-19levels(Figure2).ComparedtoCentral Osaka,themarketentryofoperatorsincentral Nagoyahadalaterstartthantheflexoperatorsof centralNagoya
Source:JLL
andfewernumberofoperatorshaveenteredthemarket. However,inrecentyears,assupply-demandofthe NagoyaGradeAofficeistightanddemandforhighly productiveworkspaceswithflexible termsandconditions haspickedup,asaresult,theflexible workspacehas expanded.
2.FlexibleWorkspace inCentralNagoya (totalleasablearea(sqm),asofthefourthquarterof2024)
Figure
Intensifying Competition Among Flexible Workspace Operators
Since2005,operatorsofflexibleworkspaceincentral Nagoyahavebeenexpandingtomeetthegrowing corporatedemandforflexibleworkarrangements. Initially,servicedofficeoperatorsRegusandServcorp startedoperations.Then,subsequently,coworking operatorWeWorklaunchedoperationsin2019, followedbyTokyoTatemono-operatedExpertOfficein
Figure3.MajorFlexibleWorkspace Operators
2020,aswellasMitsuiFudosan-runWorkstylingin2021.
Asofthefourthquarterof2024,morethanhalfofthe totalleasedfloorspaceinthemarketisoperatedby servicedofficeoperatorsRegusandthereisplentyof roomforcoworkingoperatorstoenterthemarketin thefuture(Figure3).
(Totalleasablearea(sqm),numberoflocations,asofthefourthquarterof2024)
Source:JLL *RegusincludesSpacesandOpenOffice
Inthepast,mostusersofflexibleworkspaceswere start-upcompaniesandsoleproprietors,but recently,demandforflexibleworkspacesis increasinglydrivenbylargecorporatesincentral Nagoya.
PickUpin Demandfrom Large Corporates
ParticularlyaftertheCOVID-19 pandemic,work styleshavediversifiedamonglargecorporates andtheuseofflexibleworkspaceasathird-place, whichincludessatelliteoffices6,isnotonly increasinglyseen,butalsobranchofficesand projectspaceshavebeenmoreoftenobservedas well.
Infact,thenumberofofficeworkersworkingin satelliteofficesneartheirhomesandnotonlyin centralNagoyaorneartheirworkplacesis increasing.Also,theuseofflexibleworkspaces duringbusinesstripsandexternalmeetingsis increasingandflexibleworkspaceincentral Nagoyaisexpanding.
6Satellite offices are tertiary workspaces other than corporate headquartersusedbyemployeestoincreaseproductivity
MoreFlexibleWorkStylesTake RootintheChukyoRegion
According to the Telework Population Survey published by the Ministry of Land, Infrastructure, Transport and Tourism in March 2024, the implementation of remote work in the Chukyoregionwas22%andlowerthan24%oftheKinki regionand38%oftheTokyometropolitanarea(Figure4).
However, as of fiscal year 2023, the share of employed teleworkers in the Chukyo area has not fallen and flexible workarrangementsaretakingrootintheChukyoarea.
Figure4.
FutureOpportunitiesAwaitFlexibleWorkspacesas GradeAOfficeExpands
Duringthenextfiveyears,flexibleworkspaceincentral Nagoya is forecasted to expand as large-scale offices are scheduled for completion in central Nagoya and various opportunities for tenants to move into highly competitive locations are expected to emerge (Figure 5). Already, new locations are opening in office buildings with good access around Nagoya Station with high building specifications to attract and retain demandfromtenants.
With multiple developers developing new projects and adding new supply of grade A office in central Nagoya, the expansion of flex space is expected to continue for theforeseeablefuture.
Source:JLL
Figure5.NewSupplyofGradeAOfficesinCentralNagoyaovertheNext5Years (2024-2029)
Asofthethirdquarterof2024,flexibleworkspaces in central Nagoya consists of 1.4% of large-scale offices and in terms of total net leasable area, it is approximately one-tenth of the market in central Tokyo and about one-third of that of central Osaka (Figure 6). Flex space in central Nagoya is considerably smaller than those of major global cities such as New York City and London, however, in the future, leading operators are more likely to seriously consider opening more locations as artificialintelligence(AI)anddigitizationislagging their global counterparts and market growth and developmentishighlyanticipatedgoingforward.
GlobalComparisonofFlexibleWorkspace (totalleasablearea(sqm),%shareoftotalofficestockasofthethirdquarterof2024)
Source:JLL
Figure6.
Outlook 06
FlexibleworkspaceincentralNagoyaisexpectedtoexpand ashybridworktakeshold.Diverseandproductiveworkstyles isincreasinglyviewedasimportantanddemandforflexible workarrangementsarelikelytobeseenamongboth Japaneseandforeigncompanies.
Currently,themajorityoflocationsofflexibleworkspacein centralNagoyaareoperatinginexistingoffices.However,as highlycompetitive,large-scaleofficebuildingsarescheduled toopenincentralNagoya,therewillmoreopportunitiesin thefuturetoexpandinnewlycompletedGradeAoffices.With large-scalecompetitiveofficesexpectedtoleadinthe expansion,flexibleworkspacesincentralNagoyaissetfor growthandcontinuetoprovideflexibleworkenvironments.
Researchauthors
YutoOhigashi Senior Director Research
yuto.ohigashi@jll.com
TomoyoNakamaru AssistantManager Research tomoyo.nakamaru@jll.com
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