Office Strategies and Talent Attraction: 2024 Japan Office Occupier Survey

Using the answers provided to CBRE’s “Japan Office Occupier Survey” carried out in July 2024, this report examines the attitude of corporate management toward office usage and outlook against the backdrop of Japan’s tight labor market. 

Factors underpinning Japan’s robust office market

Japan’s office market remained in good health in 2024, driven by four major factors. The first of these is growing occupier demand for office space on the back of a recovery in corporate earnings and business sentiment. The second is an increase in the number of tenants looking to expand their existing leased office space on the back of employees’ return to in-office work; a trend that has led many companies to find their current space is insufficient for their needs. Thirdly, delays and changes to plans for office building development projects have led to a perceived shortage of quality options for tenants, encouraging them to secure new premises as quickly as possible. The fourth and most significant factor is the emergence of strong demand for buildings in higher grades or with superior access as companies seek to gain an edge in recruitment amid a general lack of available workers. CBRE expects the role of the office to assume even greater importance in the coming years as a key means of securing and keeping talented workers in an era of chronic labor shortages.

Strong demand for office upgrades and expansions

With the labor shortage becoming increasingly severe, the management of companies in Japan is placing a stronger focus on factors related to employee work environment when choosing new office buildings. These factors include comfort, earthquake resistance, and commuting convenience. Desire to improve office environments remains strong, with one in two companies responding that they were planning improvements of some sort. Significantly more respondents indicated that they planned to increase investment in improving their office environments than those that planned to reduce spending. Office expansion plans are also widespread, with those indicating a desire to increase office space far outstripping those planning a reduction. CBRE projects tenant appetite for office improvements and expansions to remain robust.

Office improvements that enhance employee engagement

Improving employee engagement is the primary objective of office upgrades, with employee engagement seen as directly linked to solving the problem of labor shortages. As improvements in engagement levels are necessarily predicated on collaboration between the individual and the organization, the office is set to take on a more prominent role as a central location for the facilitation of communication. Indeed, past office improvements have been proven to provide a range of benefits in empirically measurable indices related to engagement.

The increasing importance of green buildings in recruitment

Environment, Social and Governance (ESG) has been shown to play a key role in staff retention. The survey found that the sustainability issue given the highest priority by company management in terms of business activity is employees’ health and happiness. Office spaces which consider the health and well-being of building occupants are believed to make a positive contribution to employee engagement. Almost 50% of respondents agreed with the opinion that it is fair for office buildings fulfilling ESG criteria to charge higher rents, and for those that do not to provide discounts. Green buildings which fulfill such ESG criteria tend to be more commonly found among newer and larger office developments. With companies struggling to attract talented staff, green buildings are likely to assume increasing importance in the future.