[New Report] Real Estate Market Research Report Vol.306: Decoding the Office Market through the 'Desirable Workplace Ranking' – The Relationship Between Worker Preferences and Rent Levels

Mitsubishi UFJ Trust and Banking Corporation (Chiyoda-ku, Tokyo; President: Hiroshi Kubota) has published Real Estate Market Research Report Vol.306, titled 'Decoding the Office Market through the 'Desirable Workplace Ranking' – The Relationship Between Worker Preferences and Rent Levels.'

The ranking of 'desirable workplaces' does not always align with rent levels. For investors, it is more important to assess the quality and sustainability of demand rather than just popularity. For tenants (business corporations), location selection is a management decision that involves not only rent levels but also what kind of talent they can attract and what kind of work style they can realize.

'Consumer Survey on Desirable Offices and Desirable Workplace Ranking'

In recent years, there has been an increasing trend of office relocations aimed at improving location and building specifications from the perspectives of talent acquisition, employee engagement, and human capital management. In response, Mitsubishi UFJ Trust and Banking Corporation conducted the 'Desirable Office and Desirable Workplace Ranking 2026' to understand worker intentions and clarify trends.

Source: Mitsubishi UFJ Trust and Banking Corporation, Tenant Leasing Sales Department

Relationship between Desirable Workplace Ranking and Rent Levels

This paper examines how investors and tenants, primarily business corporations, should interpret the relationship between worker preferences (the ranking of desirable workplaces) and rent levels.

Source: Mitsubishi UFJ Trust and Banking Corporation
Note 1: Office rent levels are based on the contracted rent range from Mitsubishi UFJ Trust and Banking Corporation's market trend survey 'Office Leasing Market Survey.' For areas not covered by that survey, data published by Sanko Estate is used.
Note 2: Rent levels are assumed for S and A class buildings that generally meet the criteria of being built within 20 years, within a 5-minute walk from the station, with a standard floor area of 500 tsubo or more, and a total floor area of 10,000 tsubo or more.
Note 3: Rankings 21st and below are positioned in the 'Awaiting Re-evaluation' or 'Potential Evaluation' quadrants but are not displayed in this paper.

Commuter Convenience Priority Areas

These areas often include terminal stations or major stations with residential areas behind them. Respondents support them for their high commuting and living convenience. On the other hand, they are often located at a certain distance from the central city core where rent increases are significant, resulting in relatively suppressed rent levels. In other words, while evaluations are high due to ease of access for workers, this evaluation does not necessarily translate directly into high rent levels.

Brand Established Areas

These are areas where both popularity as a desirable workplace and rent levels are high. In addition to transportation convenience, factors such as the symbolism and tradition of the office district are evaluated in a composite manner. These elements are considered to be long-term accumulated characteristics, not due to temporary redevelopment or topicality.

Awaiting Re-evaluation Areas

These areas have relatively low popularity and rent levels, and many rankings 21st and below fall into this category. They can be seen as areas where available train lines are limited, the history as an office district is relatively new, or the appeal as an office district is in the process of being updated through redevelopment. In areas with many older buildings, while renewal is limited, they are thought to maintain their function as office districts by serving as a receptacle for demand, primarily from local companies.

Potential Evaluation Areas

These areas do not necessarily have high evaluations as desirable workplaces, but their rent levels are high. In this survey, there were almost no applicable areas, but if such areas exist, it is possible that future potential for redevelopment or the area itself is being factored in and reflected in rents in advance.

Implications for Investors

From an investor's perspective, the 'Desirable Workplace Ranking' is not a direct indicator of rent levels or investment returns. However, it can serve as a clue to understanding the breadth of demand and the sustainability of an area's evaluation through worker preferences.

For example, 'Commuter Convenience Priority Areas' are closely tied to daily life, such as commuting and living patterns, and tend to have a broad base of support and a wide range of demand. Therefore, they are less susceptible to economic fluctuations or temporary topicality like redevelopment. While significant rent increases may be difficult, stable demand can be expected. If ease of work is evaluated, there may be room for rent increases.

'Brand Established Areas' are evaluated for composite reasons such as the atmosphere of the area, convenience, and the richness of facilities. It is easy to incorporate a premium into rents, and they tend to remain stable at high levels. However, it is important to note that the number of tenants with the ability to bear such high rent levels is limited.

'Awaiting Re-evaluation Areas' are a mix of areas with commercial vitality and customer attraction, areas where redevelopment is leading to the supply of large buildings, and areas with many older small and medium-sized buildings where renewal is slow. This does not mean the area is unpopular; rather, there may be a gap between the evaluation as a desirable workplace and the supply, or it may serve as a receptacle for demand primarily from local companies, with few triggers for an increase in popularity. For investment, key points will be identifying the volume zone of demand based on tenant attributes and building scale, and whether functional changes or renewal of the area can occur.

Implications for Tenants (Business Corporations)

For tenants, the rationality of paying rent cannot be explained solely by general popularity or the level of rent. It is necessary to consider what effects and value the area brings to the company, taking into account perspectives such as recruitment competitiveness, talent retention (employee satisfaction, commuting burden, etc.), and the distance and positional relationship with the company's business bases and business partners.

For example, 'Commuter Convenience Priority Areas' are easy to explain from the perspective of employee commuting burden and satisfaction, backed by worker support based on commuting and living patterns. Since rent levels are relatively low, they can be considered cost-effective (high cost performance) from a tenant's perspective. However, office location is a management decision determined by considering business efficiency and external relationships, so high cost performance is not always the optimal choice for a company. As a result, there are areas where office agglomeration is not necessarily progressing.

'Brand Established Areas' are thought to have appeal for highly specialized talent and career-oriented individuals, backed by business agglomeration and symbolism.

In 'Potential Evaluation Areas,' factors such as commercial agglomeration and redevelopment may be ahead of the evaluation as an office district. From the perspective of commuting convenience and business efficiency, it may not necessarily be directly linked to human resource or business strategy. However, if the communication environment and productivity improve, and effects such as enhanced recruitment and talent retention are expected, there will be rationality in accepting that rent level.

As described above, the relationship between the 'Desirable Workplace Ranking' and rent levels is not a simple proportional relationship but is formed in a complex manner depending on the reasons for popularity and the quality of demand. In other words, how it is reflected in rent differs depending on whether it is based on demand for commuting and living convenience or on symbolism and image. With this background in mind, the office