Xymax Real Estate Institute

TOPIC REPORTTOPIC REPORTBest Practices of Small-to-Medium-Sized
Buildings – The 1st Report- Introduction of the building owners’ efforts in the changing times -September 24, 2019

Office buildings represent real estate assets as typical as residential houses, and play key roles as the basis ofactivities for the companies and the public agencies that support the Japanese economy. Office buildings canbe divied into two categories by size – large-sized buildings and small-to-medium-sized buildings. When we
look at the stocks of the office buildings for rent, the number of the small-to-medium-sized buildings amounts
to 90%. Since many of them were provided en masse during the Japanese asset price bubble period, the wholestocks get aged year by year. In the center of Tokyo, the mainstream of the supply is for large-sized buildings
and a new supply of the small-to-medium-sized buildings is small.1 A shift in the flow of people associated withlarge-scale development and a renovation of town amenity bring about changes in the office areas. From thedemand side, the office strategies of the companies and the attributes desired for an office are changing becauseof the backgrounds including workstyle reforms. Thus, the environment around the office building business getsincreasingly diversified and complex.
Xymax Real Estate Institute (Xymax REI) and the laboratory of Professor Yukio Komatsu at Department ofArchitecture, Waseda University have conducted a joint study since 2015 via continuous questionaires andinterviews from the building owners possessing small-to-medium-sized building(s) and leasing office building(s).
The outcome was released on our website. 2 The studies since 2017 revealed that many building owners had
relatively optimistic short-term outlook enjoying a strong office market but that a pesimistic view dominatedfor the mid-long term. Concerning about increasing costs of repair and refurbishment caused by their aging
buildings along with a decline in rent and increase in vacancy, building owners are aware of the necessity to takesome actions; however, they seem to be hesitant to implement the measures for these problems because they
have operational challenges, cannot find economic reasonableness, and/or cannot see from which to start.
Xymax REI has conducted the questionnaire surveys of the building owners and the interviews on theirpractices continuously. The results contain building owners’ creative ideas and tips for building management,
which must be informative also for other building owners. Thus, we decide to release “Best Practices of Smallto-Medium-Sized Buildings - No.1” superviesd by Professor Yukio Komatsu of Waseda University, in which
excellent cases are introduced as the best practices. Xymax REI plans to continue interviews from building owners
and to release a series of best practices regularly. We hope this article will be beneficial information for the
stakeholders of office leasing including building owners.

1

TOKYO 23 WARDS Office Stock Pyramid 2019, released on January 23, 2019https://www.xymax.co.jp/english/research/images/pdf/20190123.pdf.
OSAKA CITY Office Stock Pyramid 2019, released on January 23, 2019https://www.xymax.co.jp/english/research/images/pdf/20190123_2.pdf

2Building Owner Survey 2015, released on November 26, 2015
https://www.xymax.co.jp/english/research/images/pdf/20151126.pdf
Building Owner Survey 2017, released on October 25 ,2017https://www.xymax.co.jp/english/research/images/pdf/20171025.pdf
Building Owner Survey 2018, released on October 25, 2018https://www.xymax.co.jp/english/research/images/pdf/20181025.pdf

TOPIC REPORT: Best Practices of Small-to-Medium-Sized Buildings - The 1st Report
The contents of this report are as of the time of writing. Xymax Real Estate Institute does not guarantee their accuracy or completeness. This report may not be
reproduced, cited, transmitted, distributed, or reprinted without prior permission of Xymax Real Estate Institute.
Copyright © 2019 Xymax Real Estate Institute Corporation. All rights reserved.

1

TOPIC REPORT｜Xymax Real Estate InstitutePurpose of the survey
The typical measures to improve the value of a building include: hardware refurbishment such as building
renovation and seismic strengthening; and intangible efforts such as thorough cleaning, additional tenant
services, and cooperation with the neighboring community. However, the effectiveness of each measure varies
a great deal by building and there is no index to evaluate it.
This survey is to pick up a wide range of efforts the building owners has made to tackle a big challenge of“improving the values of a small-to-medium-sized building,” and to archive them as the best practices. In
addition, we classify the values of buildings into two types – the value perceived by the building owner (e.g.
property value, profitability, and reduction of operational costs) and the value perceived by the tenants (e.g.
comfortability, satisfaction in terms of usage or needs) and discuss how they were changed before and after
each owner’s specific efforts.
The building owners’ efforts introduced here as the bestpractices were involved in “making use of his own building’s
features and advantages,” “analyzing and identifying thetarget tenants,” and/or “improving the building values
through efforts such as vitalization of the neighboring
community.” The effects of these initiatives are also
introduced below. The information should be beneficial forthe building owners who cannot decide which measure
should be taken.
Xymax REI will continue to collect such individual
solutions as many as possible and analyze how the valuesof a building are improved for office building leasing fromthe aspects of “building,” ”operation,” ”tenant,”and ”community and environment,” for the purpose of
discovering universal tips from the collected individual
solutions.

Introduction of the best practices
This first report introduces the initiatives for the following five buildings as the best practices:
I. Enshow Building (Nagoya City), where renovation of the whole building was conducted focusing on seismic
strengthening plus functionality and enjoyable design with an aim to attract the tenants of long-term contract;
II. Daizen Building (Fukuoka City), of which image was refreshed through branding of the building using its
website and SNS;
III. Kinsan Building (Tokyo) that regenerates continuously foreseeing the tenants’ needs throughout the ages,
as shown in its acquisition of LEED Gold certification in 2018;
IV. Tamaru Building (Tokyo) that catches the changes in social conditions in an agile manner and succeeds inachieving full occupancy by expanding its target tenants; andV. Fuji (Alt Kobe) Building (Kobe City) that suceeded in making it profitable by unique refurbishment andmarketing strategy and facilitating communications and integration among the old and new tenants.
Each case is described by the following issues in general:








Outline of the initiative,
Profile of the building,
The background and the problems driving the initiative,
The details of the initiative,
The effects of the initiative and the responses from the users,
Change in the values after the initiative, andThe building owner’s comments.

TOPIC REPORT: Best Practices of Small-to-Medium-Sized Buildings – The 1st Report
The contents of this report are as of the time of writing. Xymax Real Estate Institute does not guarantee their accuracy or completeness. This report may not be
reproduced, cited, transmitted, distributed, or reprinted without prior permission of Xymax Real Estate Institute.
Copyright © 2019 Xymax Real Estate Institute Corporation. All rights reserved.

2

TOPIC REPORT｜Xymax Real Estate InstituteI.

Enshow Building (Nagoya City)

Enshow Building is aged more than 40 years and has gone through renovation of the whole building fromboth aspects of hardware and intangible issues to enhance satisfaction of tenants with a focus on those who
may occupy their room long term as the targets. At refurbishment, the owner did some works by himself suchas creating a screen at the staircase landing and purchasing commercial carpets, which enabled reduction of
costs as possible and resulted in a design well-balanced by old and new. In the aspect of functionality, the ownermade a range of efforts, being conscious of energy-saving effect and changes in workstyle. It is a comfortablebuilding in which the owner’s sophisticated and playful spirit is embodied everywhere. In addition, the building
went through seismic strengthening for safety and security of the tenants.

1. Profile of the building
Location: Nagoya City, Aichi Prefecture (1-minute walkfrom Gokiso Station)
Gross floor area: 1,009 square meters
The number of floors: 5 stories above the ground
Year built: 1974
Year of renovation: January 2016 to February 2017
Surrounding environment: Located conveniently at theplace accessible in about 15 minutes from Nagoya Station by subway. The nearest station isaccessible via both subway Tsurumai Line and Sakura-dori Line. It is a calm residential area,
where commercial buildings exist only along the major road and in front of the station. The
area allows people to live near workplace.
The owner’s age: In his 50’s

2. Reasons for performing renovation of the whole building
In 2011, when the owner started to recognize a necessity to make some efforts for the aged building, the Off
the Pacific Coast of Tohoku Earthquake occurred. When the owner went to the affected area with the staff of theaffiliated construction company for reconstruction assistance, he recognized an importance of aseismic
measures by watching collapsed reinforced concrete buildings. With a high risk of the Nankai Trough Earthquake,the owner were planning to rebuild Ensho Building, thinking that assurance of earthquake-resistance strength
is requisite for inviting tenants expected to make a long-term contract. However, because of soared cost ofbuilding and difficulty in constructing a building shape of the initial plan, it was changed to maintain the existingbuilding while perforning seismic strengthening and renovation of the whole building.

TOPIC REPORT: Best Practices of Small-to-Medium-Sized Buildings – The 1st Report
The contents of this report are as of the time of writing. Xymax Real Estate Institute does not guarantee their accuracy or completeness. This report may not be
reproduced, cited, transmitted, distributed, or reprinted without prior permission of Xymax Real Estate Institute.
Copyright © 2019 Xymax Real Estate Institute Corporation. All rights reserved.

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TOPIC REPORT｜Xymax Real Estate Institute
3. The details of whole building renovation① Seismic strengthening
For the first floor, the earthquake-resistant walls were installed and the columns were reinforced byusing aramid fibers. For the upstairs, steel braces were applied inside of the building not to cause
damage of external view. At installation of the braces, carrying the complete products into the rooms
was impossible due to their size and weight, and thus the components were put together at eachfloor. They installed a heavy component of approximately 700 kilograms using a pulley to make itwith a small manpower.

Earthquake-resistant walls and a column covered witharamid fibers on the 1st floor (left)
Braces from outside (upper right)
and inside of the room (lower right)② Overcoming the disadvantages
The following refurbishments were performed to provide comfortable spaces where the users do not
feel cramped despite low ceiling height of the building aged more than 40 years.
Double skin system: The walls of smoked glass were installed between the existing exterior wall andthe operation space with a distance of 30 to 40 centimeters. This double skin system was planned
originally for aesthetic purpose to hide the braces installed inside of the external wall, but it also has
good insulation and thus realizes energy saving. Although the office area became smaller, the double
skin system is received well among tenants because it provides aesthetic advantages in the rooms
while the smoked glasses also allow protection of privacy without necessity of curtains or window
shades but with sufficient exposure to sunlight.
Glass-walls of the office: The walls of the meeting rooms were replaced by the glass plates standing
from the floor to the ceiling to give a spacious look.

TOPIC REPORT: Best Practices of Small-to-Medium-Sized Buildings – The 1st Report
The contents of this report are as of the time of writing. Xymax Real Estate Institute does not guarantee their accuracy or completeness. This report may not be
reproduced, cited, transmitted, distributed, or reprinted without prior permission of Xymax Real Estate Institute.
Copyright © 2019 Xymax Real Estate Institute Corporation. All rights reserved.

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TOPIC REPORT｜Xymax Real Estate Institute
Removal of the suspended ceilings: In the rooms of smaller than 100 square meters, the suspended
ceilings were removed and the lighting apparatuses were attached directly to the ceilings. Indirect
lightings are used mainly, and the rails for the lighting apparatuses were installed for the tenants toaccommodate the position and lighting intensity as needed by their usage.
Flat cords: Raised floors are not installed but the floors are covered with tile carpets. Electric wiringconsists of the wall outlets and the flat cords of 0.9 millimeter thick, and wireless LAN can be used as
the standard.

Glass walls of an office

The suspended ceilings were removed, and the indirect
lightings were attached directly to the ceiling.

③ Enhancement of tenant satisfaction
Rental meeting room: The room in front of theelevator lobby on the 2nd floor is used as a rental
meeting room. It can be booked online with thefee of 1000 yen per hour, being used for businessmeeting or recruitment interview. (Intially, there
were rental meeting rooms on the 2nd to the 4th
floors, however, the rooms on the 3rd and the 4th
floors are used exclusively by a tenant.)
Common refreshing space: The existing rooftop
deck is provided with the chairs, the BBQ
installation, and a smoking room to be a spaceused freely by the tenants.
Green and wood: To give a peacefulatmosphere, green plants as well as woodmaterials are used for interior finish andfixtures. For the staircase landing, the ownercreated a screen made of wood scraps byhimself. The refreshing space on the rooftop
deck is floored with wood and garnished withgreen plants. The tables of the meeting rooms
are made of solid timbers of Japanese cypress.
Thus, many spaces in the building give thewarmth and aroma of wood.

BBQ installation provided on the rooftop deck.

A screen at the staircase landing(made of wood scraps by the owner)

Pictogram on the door tothe outside.

Wi-Fi: Free Wi-Fi network is available in the building even at the spaces outside of the rooms.

TOPIC REPORT: Best Practices of Small-to-Medium-Sized Buildings – The 1st Report
The contents of this report are as of the time of writing. Xymax Real Estate Institute does not guarantee their accuracy or completeness. This report may not be
reproduced, cited, transmitted, distributed, or reprinted without prior permission of Xymax Real Estate Institute.
Copyright © 2019 Xymax Real Estate Institute Corporation. All rights reserved.

5

TOPIC REPORT｜Xymax Real Estate Institute④ Disaster preparedness
For each tenant, a gas-cartridge-powered generator, a portable toilet, and foods for 3 days areprovided. Futher, for contribution to the neighbouring community, water in the water receiving tankis prepared to be shared at disaster and the space for emergency stocks is offered for free to the local
community association.
⑤ Unique features added by the owner
Design: Many enjoyable designs are provided and seen in the building
as the unique features added by the owner, including an drawing of ahuman shape on the door front of a restroom, the gap of old(unpainted stairs) and new (refurbished spaces of the elevator lobbies),
the carpets on the elevator lobbies chosen to fit an image of each floor,
and a vintage motorbyke at the entrance. The building name plate wascreated to adopt the logo at the time of its new construction,
mimicking even rust.
A funny drawing on the door front of a restroom.

Commercial products: Using not only thematerials as suggested by the designing process
but also the commercial products purchased bythemselves from a do-it-yourself store or a largescale furniture store (e.g. carpets, legs of themeeting room tables), the owner succeeded in
reducing the costs of refurbishment.
Safety: In addition to seismic strengthening, theowner took a safety measure for preparation
against falling of the exterior wall tiles that might
be seperated due to eathquake or other reasons.
The canopy roof provided above the entrance
should play the role of a cushion in case any tile
falls down.

A vintage motorbike is placed as a decorative object.
(It may activate conversations in the business meetings.)⑥ The company’s internal spaces
Kitchen: In the space used by their own company, ameeting space with a compact kitchen is prepared. Beingused for breaks of the cleaning staff, meetings with avendor/supplier, or other purpuses, the space is wellreceived by the users saying that it allows active andfriendly conversations not possible in the meeting rooms.
Workplace: Upon renovation, in the company’s internal
spaces also, they purchased new fixtures and adopted
creative desk layouts and hot-desking to try newworkstyles. The company intends to evaluate theseattempts to see how they affect the quality of jobs, inorder to summerize the challenges and other issues to be
utilized for future proposals to their tenants.

A meeting space with compact kitchen.
The windows are furnished with marine window
frames.

TOPIC REPORT: Best Practices of Small-to-Medium-Sized Buildings – The 1st Report
The contents of this report are as of the time of writing. Xymax Real Estate Institute does not guarantee their accuracy or completeness. This report may not be
reproduced, cited, transmitted, distributed, or reprinted without prior permission of Xymax Real Estate Institute.
Copyright © 2019 Xymax Real Estate Institute Corporation. All rights reserved.

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TOPIC REPORT｜Xymax Real Estate Institute
4. Cost, effects, and other benefits regarding the whole building renovation
The owner spent approximately 125 million yen (of which, seismic strengthening accounts for 31 million yen)
for renovation of the whole building. The followings are the effects and the tenant relations after the initiative:
Effects;The occupancy rate keeps to 100% after renovation.
Despite reduction in the leased area after renovation, the rent increased by 2500 yen per tsubo.
It resulted in a revenue increase of approximately 7 million yen per year.

Tenant relations;Because the double skin system (the screens to hide braces) has an effect of thermal insulation,
now the temperature in the rooms does not fluctuate greatly. The tenants made favorable
comments saying that the rooms were comfortable. The demands or claims on the air
conditioning are scarcely heard from the tenants.
The fixings for disaster preparedness contribute to security and safety of the tenants, although
they are not the factors considered by the tenants at their selection of the building.
There are increased number of people who want to move in the building. The owner introduces
his declined applicants to the neighbor buildings, thus contributing to activation of thecommunity as well.

Energy-saving effect;With thermal insulation effect of the double skin system, an introduction of LEDs, renewal of air
conditioning and others, the electricity cost was reduced by approximately 44% compared tothat before the renovation – an achievement more than expected.

5. Change in the building values before and after the whole building renovation (the owner’s
evaluation)
We asked the owner to evaluate the change of his building’s values before and after the renovation of thewhole building. As the result, the values added by both seismic strengthening and renovation exceeded those
expected before renovation. In particular, the value added by renovation is much greater than that was expected.

Owner's evaluation on his building values
before and after seismic strengthening

Owner's evaluation on his building values
before and after renovation

Building value perceived by tenants *2

Building value perceived by tenants *2

Greater

Greater

Value after renovation(Value expected
Value after strengthening

beforehand)(Value expected beforehand)Greater

Smaller

Value before strenghening

Building value perceived
by owner *1

Greater

Smaller

Building value perceived
by owner *1

Value before renovation

Smaller

Smaller*1 Building values perceived by the owner: Property value, profitability, reduction in the operational costs, etc.
*2 Building values perceived by the tenants: Comfortability, satisfaction in terms of usage or needs, etc.
* We asked the owner to evaluate the values of his building assuming that the point at the intersection of the twolines represents the average values of the surrounding buildings.

TOPIC REPORT: Best Practices of Small-to-Medium-Sized Buildings – The 1st Report
The contents of this report are as of the time of writing. Xymax Real Estate Institute does not guarantee their accuracy or completeness. This report may not be
reproduced, cited, transmitted, distributed, or reprinted without prior permission of Xymax Real Estate Institute.
Copyright © 2019 Xymax Real Estate Institute Corporation. All rights reserved.

7

TOPIC REPORT｜Xymax Real Estate Institute
6. The owner’s comments on the whole building renovation and future building management
We placed greater value on long-term occupancy than increase of rent. Because of our aseismic measures, apublic corporation moved into the building. Although the measures other than seismic strengthening (the fixings
for disaster preparedness and utilization of the shared space) are not the key factors considered by the tenants
upon their selection of buildings, we believe that all these measures contribute to a sense of great security ofthe tenants. Our devices created one by one carefully in consideration of tenants’ needs and easiness of working
resulted in a greater number of good responses after a while than expected. We anticipate that it will lead to
long-term occupancy.
In future, our workstyle must be changed even in the medium-sized companies like ours. Prevalence of online
infrastructure will allow remote meeting and teleworking. Because we have no plan to expand our workspace,
we need to accept various workstyles before recruiting people. Currently, we enable hot-desking by replacing
the desks that have been used by individual persons with the long desks that can be shared by multiple persons.
In addition, we started a pilot implementation of teleworking to allow work from home. By making use of thecommunication tools such as Skype for our meetings, we hope to respond to the needs of our employees who
have a small child or a family member in need of nursing care. Although there are problems and challenges, we
also hope to offer satellite office business near the homes, if it can be realized by the scale of our company.
The background of my thinking like this was my experience of nursing my father who passed away recently.
At that time, I found it was difficult to give a good nursing care if I had been a typical corporate employee. We
would like to accommodate our building business to allow our proposal of workstyles that can respond to theaged society and labor shortage. Besides, responding to a change in the society, we utilize sharing services toreduce our fixed costs. For example, we own only one company vehicle and rely on time-sharing service. The
real estate industry will be changed in future, and the change must be drastic. It will be regenerated after
retirement of the generation that values conventional business practices.

TOPIC REPORT: Best Practices of Small-to-Medium-Sized Buildings – The 1st Report
The contents of this report are as of the time of writing. Xymax Real Estate Institute does not guarantee their accuracy or completeness. This report may not be
reproduced, cited, transmitted, distributed, or reprinted without prior permission of Xymax Real Estate Institute.
Copyright © 2019 Xymax Real Estate Institute Corporation. All rights reserved.

8

TOPIC REPORT｜Xymax Real Estate InstituteII.

Daizen Building (Fukuoka City)

Daizen Building is a case in which an aged building is regenerated by operational efforts, not by hardware
upgrading. The owner believes it is a key to discover the charms of the building and the neighboring community
and to organize and communicate them clearly to meet the needs of the tenants and the community. Thus, thecompany addresses branding of the building aiming to improve its values, through sending its messages on
its website and SNS and responding carefully to the demands from its tenants in both hardware and intangible
aspects.

1. Profile of the building
Location: Fukuoka City, Fukuoka Prefecture (7-minute walkfrom Akasaka Station)
Gross floor area: 3,543.7 square meters
The number of floors: 5 stories above the ground and 1
underground story
Year built: 1973 (Expanded in 1979)
Surrounding environment: The building is in a good officeenvironment where there are the court building,the Legal Affairs Bureau, and Ohori and Maizuru
Parks in the proximity. The area has become popular also as a living and academic district
and is busy with constructions of high-rise apartment buildings and others these days.
The owner’s age: In his 30’s

2. Reasons for starting an initiative toward branding
When the current owner took over the operation of thecompany in 2014, the occupancy rate of the building was less than
70%. While the former owner was technically oriented and focused
the company’s efforts on building maintenance upon managing hisbuilding, he could not take up marketing activities. At that time, inthe surrounding area, office buildings were rebuilt into relatively
high-end housings such as high-rise apartment buildings, andelementary and junior high schools were remodeled. Thus, the area
was shifting to an academic district. On the other hand, there is asignificant amount of needs for offices in the area where theadministrative bodies such as the court building and the Legal
Affairs Bureau are located. Thinking of an increase of theoccupancy rate as the greatest challenge of the building, thecurrent owner started the company’s marketing activities byfacilitating ”branding” as an approach to regenerate the agedbuilding through understanding of the surrounding area’ situation.

Automatic doors since the new
Automatic doors since the new construction
construction

TOPIC REPORT: Best Practices of Small-to-Medium-Sized Buildings – The 1st Report
The contents of this report are as of the time of writing. Xymax Real Estate Institute does not guarantee their accuracy or completeness. This report may not be
reproduced, cited, transmitted, distributed, or reprinted without prior permission of Xymax Real Estate Institute.
Copyright © 2019 Xymax Real Estate Institute Corporation. All rights reserved.

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TOPIC REPORT｜Xymax Real Estate Institute
3. The details of branding
Daizen Building identified the following 4 issues as its brand identities and is communicating them on its
website and SNS including Facebook.

Official Website of Daizen Building using plenty of videos and photos① Attachment to community
The website introduces the history and the constructions in Akasaka and Maizuru area where thebuilding is located. By discovering the charms of the area and reminding community-based peole offond memories, it is attempting to keep and enhance the visibility of the buiding as well as that of
the neighboring community.
② Fusion of retro-inspired and brand-new charms
The building has a retro-inspired charm found in its
spacious staircase landing, spiral-like inside stairs andothers that can be seen rarely these days. While
preserving the merits of construction and equipment
at the time of its new construction, its relatively narrow
and obsolete entrance was refurbished to give brightand clean impressions.
③ Complete cleaning annd maintenance
How inspections and cleanings are perfomed, and how
security and safety are considered – such building
maintenance issues are hard to be known by thetenants. Daizen Building has been carefully maintainedsince the time of the former owner. The company put
the videos and the photos of its mainenance process
on its website to appeal to its tenants. By letting thetenants know the maintenance process, the company
had a range of benefits: After releasing a video showing
the complete way of cleaning a smoke removal systemequipped in the smoking space, smokers improved
their manner and non-smokers’ hate of smoke wasrelieved.

Antique spiral-like inside stairs

A video on cleaning of a smoke removal system
A video on cleaning of a smoke removal
releasedon the website
system releasedon the website

TOPIC REPORT: Best Practices of Small-to-Medium-Sized Buildings – The 1st Report
The contents of this report are as of the time of writing. Xymax Real Estate Institute does not guarantee their accuracy or completeness. This report may not be
reproduced, cited, transmitted, distributed, or reprinted without prior permission of Xymax Real Estate Institute.
Copyright © 2019 Xymax Real Estate Institute Corporation. All rights reserved.

10

TOPIC REPORT｜Xymax Real Estate Institute④ Addressing the needs of tenants
For the tenants of a small sectioned floor, it is difficult to have a meeting room and/or a refreshingspace in their leased area. The building provides a time-sharing meeting room (available also for theusers from outside) and a refreshing space to be used for recruitment activities, business meetings,
lunch, and other purposes of the tenants. The refreshing space having plenty of women’s magazinessees an increasing number of female users these days.

Rental meeting room with meeting tables and workspaces

Bright and relaxing refreshing space⑤ Other efforts
The company started ads on SNS including Facebook, in order to attract the companies and start-ups
located in the remote areas like Tokyo and Osaka that hope to launch their office in Fukuoka to its
website. In addition, its building business responds to the needs of the surrounding area by the efforts
such as acceptance of a field office for increased number of constructions near the building and taking
a measure against doves in consideration of a hygienic effect for future move-in of a preschool.

4. Cost, effects, and responses regarding the branding initiative
The owner spends approximately 6 million yen for refurbishment of the shared space, approximately 700
thousand yen for production and enhanced security of its website, and approximately 175 thousand yen/monthfor running costs of website operation and others.
The effects and the responses after branding and refurbishment are as follows:
Effects;The occupancy rate increased from approximately 70% to 100% (as of August 2019).
An increase of the rent since its start in 2018.

Responses from the tenants;

Having known the maintenance process, they had a sense of security.
They feel that refurbishment of the entrance made the inside of the building brighter.
An increasing number of women are using the refreshing space.

Other benefits;The website plays a role of a communication tool with the real estate brokers. One company
introduced a firm operating rental meeting rooms, knowing the situation of the building.
Many potential tenants are checking the building on the company’s website. Two inquiries via
the website led to making contracts.
Serving the outside users of its rental meeting room resulted in enhancement of mannerconsciousness toward the customers among the company’s employees.

TOPIC REPORT: Best Practices of Small-to-Medium-Sized Buildings – The 1st Report
The contents of this report are as of the time of writing. Xymax Real Estate Institute does not guarantee their accuracy or completeness. This report may not be
reproduced, cited, transmitted, distributed, or reprinted without prior permission of Xymax Real Estate Institute.
Copyright © 2019 Xymax Real Estate Institute Corporation. All rights reserved.

11

TOPIC REPORT｜Xymax Real Estate Institute
5. Change in the building values before and after the branding initiative (the owner’s
evaluation)
We asked the owner to evaluate the change of his building’s values before and after the branding initiative.
The change of the values was as expected. The owner anticipates that the benefits would be added further by
the outcome of the company’s current efforts using its website and SNS.
Owner's evaluation on his building values
Building value perceived by tenants *2

Greater

Value after initiative= Value expected beforehandGreater

Smaller

Building value perceived
by owner *1

Value before initiative

Smaller*1 Building values perceived by the owner: Property value, profitability, reduction in the operational costs, etc.
*2 Building values perceived by the tenants: Comfortability, satisfaction in terms of usage or needs, etc.
* We asked the owner to evaluate the values of his building assuming that the point at the intersection of the twolines represents the average values of the surrounding buildings.

6. The owner’s comments on his initiative toward branding and future building management
It is a key to organize and communicate clearly the charms of the building. With interactive communications
using SNS, now we can receive the responses from our tenants directly and respond carefully to their needs,
even to a minor one. Before taking over a job of building management from the former owner, I launchedbusinesses related to events, advertisement, IT, and others. In this company, I hope to try brand-new sales styles
and advertisements we haven’t done before one after another, building on my experience. Now we take somemeasures to receive responses from the potential tenants directly. For example, we are running a ”preview
campaign” in which we offer a gift to the potential tenants who came to our building for preview via our website
or Facebook, through which we receive “Like👍.”
Our efforts are still to be made continuously. We hope to keep on our initiatives toward refurbishment of thebuilding from mid to long-term viewpoint as well as branding and publicity of the building and the neighboring
community.

TOPIC REPORT: Best Practices of Small-to-Medium-Sized Buildings – The 1st Report
The contents of this report are as of the time of writing. Xymax Real Estate Institute does not guarantee their accuracy or completeness. This report may not be
reproduced, cited, transmitted, distributed, or reprinted without prior permission of Xymax Real Estate Institute.
Copyright © 2019 Xymax Real Estate Institute Corporation. All rights reserved.

12

TOPIC REPORT｜Xymax Real Estate InstituteIII.

Kinsan Building (Tokyo)

Kinsan Building is a commercial building for rent located in Nihonbashi, Tokyo that was built in 1931. Initially,a drapery wholesaler established in Edo period occupied the first floor. The building was the first work designedby an architect Togo Murano after his independence, and enjoys the reputation of being an ”eternal masterpiece.”
Going through World War II and now celebrating its 88th anniversary, the building has been meeting the needsof the age repeating large-scale renovations from time to time – from the 1st renovation in 1956 to the 6th
renovation in 2014. The building has undergone lots of improvements to regenerate continuously foreseeing
the tenants’ needs throughout the ages. Here, we focus on the two initiatives as the best practices: acquisitionof LEED Gold certification with which their efforts to improve energy-saving and environmentally conscious
effects are backed by the third-party certification, and seismic retrofitting and renovation started after a key
tenant moved out.

1. Profile of the building
Location: Chuo Ward, Tokyo (1-minute walk from Mitsukoshi-mae
Station)Gross floor area: 7,843.05 square meters
The number of floors: 8 stories above the ground and 1
underground story
Year built: 1931
Surrounding environment: In the area, office buildings (e.g. Bankof Japan, megabanks, and securities companies) andshopping facilities (e.g. flagship Nihonbashi
Mitsukoshi department store) coexist. Recent years, amajor developer has been promoting redevelopmentof the area and many buildings were rebuilt.
The owners’ age: In his 70’s and in his 40’s

2. Reasons for applying for LEED certification and the process
The owner got interested in LEED3 certification when he visited the Unites States joining a study tour on
property management (PM) during 2008 to 2010, through which he became aware of environmentally conscious
buildings being advanced in US. In particular, he sympathized with an idea of LEED that the building’s efforts toprovide the spaces where the users can spend comfortably will result in a higher rating, thinking that it coincidedwith his company’s management philosophy. Having visited Empire State Building
and found that the building built in 1931 was LEED certified, he thought it might bepossible for his building to acquire the certification and applied for it in 2012. The
company has maintained its building with a mid to long-term viewpoint, andintroduced energy-saving equipment proactively at the past refurbishments. The
state of controlling the equipment is very good: It is operated by the employees, andthey modify the operations on demand to enhance tenant satisfaction. The
assessment indicated that Energy Star (a certification for energy efficient buildings)
score earned 93 points. Although LEED performance score was above 60 points – therating level for Gold certification, they pointed out the problems regarding water-saving performance of sanitaryware (a requirement) and ventilation capacity of HVAC.

3

LEED (Leadership in Energy and Environmental Design) is a green building rating system available for building and community projects.
It was developed in 1996 by the U.S. Green Building Council comprised of representatives from a range of areas in the industry.

TOPIC REPORT: Best Practices of Small-to-Medium-Sized Buildings – The 1st Report
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TOPIC REPORT｜Xymax Real Estate Institute
Because seismic retrofitting and renovation from 2014
permitted the building to overcome the issues pointed out,
the company reattempted LEED acquisition. This time, thecompany applied for it following the new rating system called“Arc” performance platform (that measures building
performance by comparing metrics across the globe), andmade a success of acquiring LEED Gold certification in 2018.
Besides renovation, the company implemented environmentA DP alarm in the smoking room and environmentand human-friendly measures such as placing mats at thefriendly detergents
entrances for an anti-dust purpose, production and installationof a differential pressure (DP) monitoring and alarming device tomaintain negative pressure in the smoking room, provision of face masks to the cleaning staff, and use ofdetergents made from natural ingredients.

3. Seismic retrofitting and change in the floor layouts
In 2014 when a key tenant moved out and the occupancy rate went
down to approximately 50%, the owner recognized a necessity forrenovation strongly, facing relative degradation in the functionality of theshared spaces including restrooms. Also, because the 1st seismic
retrofitting in 2006 did not attain “Is” 40.6, the company started the 2nd
retrofitting in which “the earthquake resistant studs system” wasemployed to strengthen the exterior walls excluding the windows using
reinforced concrete walls. Although the system decreased the rentableratio of the building with the thickened exterior walls and the interior
strengthening walls, the owner made safety of tenants a primary concern.
A floor plotted by earthquake-resistantIn addition, the company changed its floor layouts of the building to bewalls
consistent with the number of earthquake-resistant walls in each floor.
For example, with a smaller number of earthquake-resistant walls, now the 7th store is the only floor to be leased
at whole floor having more than 120 tsubo rentable area. Because these layouts coincide with the needs of theclients in the surrounding area, now the building has the tenants occupying a small space of 10 to 40 tsubo andkeeps 100% occupancy rate. Moreover, for the tenants having difficulty to prepare a meeting room and/or asmoking room in their own space due to low utilization rate, the building provides a rental meeting room anda shared smoking room in the first basement and the mezzanine floor, respectively.

4

Is (seismic index of Structure): An index to measure aseismic capacity of a building. According to the Act for Promotion of Renovation
for Earthquake-Resistant Structures of Buildings, a building with Is 0.6 or over is deemed to be at a low risk of falling over or collapse at an
earthquake with the Japanese seismic intensity of 6 to 7.

TOPIC REPORT: Best Practices of Small-to-Medium-Sized Buildings – The 1st Report
The contents of this report are as of the time of writing. Xymax Real Estate Institute does not guarantee their accuracy or completeness. This report may not be
reproduced, cited, transmitted, distributed, or reprinted without prior permission of Xymax Real Estate Institute.
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TOPIC REPORT｜Xymax Real Estate Institute
4. Cost, effects, and responses regarding acquisition of LEED certification and renovation
The cost needed for LEED certification included approximately 1.5 million yen for consulting fee andmiscellaneous expense and approximately 200 thousand yen for a device installed for maintaining the negative
pressure of the smoking room. The costs for seismic retrofitting and renovation are not listed here since they
are included in the budget of the mid to long-term plan.
The effects and the responses from the tenants after LEED certification and renovation are as follows:
Effects;The occupancy rate increased from 50% to 100% (as of January 2019).
The rent per unit area increased, although the total revenue did not change much because therentable area decreased.

Responses from the tenants;The tenants satisfy with renovation saying that restrooms look clean and are easy to use and theshared spaces are spacious and look high-quality.
By measuring the energy consumption level continuously and disclosing the level of power usage
to each tenant, it can lead to energy-saving efforts of the tenants.
Maintaining the negative pressure in the smoking room succeeds in preventing leakage ofcigarette smoke, resulting in an increased cleanliness perceived by the tenants. Annual tenantquestionnaire also continues to indicate their favorable opinions.

Operational benefits;

Use of detergents made from natural ingredients alleviated cleaning staff’s rough skin andeliminated the need for second wipe.
By covering the wall of the smoking room with a paint that allows wiping with a wet cloth, now tar
on the wall can be removed easily which enables to keep the room clean.

Other benefits;

According to a real estate broker, potential tenants visiting the building were surprised at its good
maintenance when they knew that it was aged more than 80 years. Thus, the company urges themto look in the building before anything else.

TOPIC REPORT: Best Practices of Small-to-Medium-Sized Buildings – The 1st Report
The contents of this report are as of the time of writing. Xymax Real Estate Institute does not guarantee their accuracy or completeness. This report may not be
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TOPIC REPORT｜Xymax Real Estate Institute
5. Change in the building values before and after acquisition of LEED certification andrefurbishment (the owner’s evaluation)
We asked the owner to evaluate the change of his building’s values before and after acquisition of LEED
certification and refurbishment. Because the company received much better responses from the tenants after
the initiatives than the owner expected, the building values perceived by the tenants are increased.
Owner's evaluation on his building values
Building value perceived by tenants *2

Greater
Value after initiative(Value expected beforehand)

Smaller

Value before initiative

Greater

Building value perceived
by owner *1

Smaller*1 Building values perceived by the owner: Property value, profitability, reduction in the operational costs, etc.
*2 Building values perceived by the tenants: Comfortability, satisfaction in terms of usage or needs, etc.
* We asked the owner to evaluate the values of his building assuming that the point at the intersection of the twolines represents the average values of the surrounding buildings.

6. The owner’s comments on his initiative toward undertaking acquisition of LEED certification
and refurbishment and future building management
Efforts to take some measures for scarce energy must be needed further, and we believe now it is importantfor companies to address energy-saving issues. I heard that, in US, acquisition of an environmental certificationinfluences the values of the building greatly and many tenants determine their move-in depending on thecertification. The Japanese tenants would be so near future. Our continued proactive and right building
management resulted in acquisition this time: LEED certification is a proof of our efforts. Energy-saving effects
can be attained not only by expensive hardware upgrade but also by operational tweaks.
Focusing on enhancement of tenant satisfaction as
the first priority, we have made our persistent efforts
to add the values of our building, such as combining
individual store’s air conditioning and central heatingof greater humidifying effect, keeping private posts
convenient for tenants, and operating building
maintenance by our employees. We believe that it isnecessary for us to make our consistent efforts toprovide environmentally friendly and energy-savingbuilding and continue new improvements, in order tolet our building loved by our tenants and meet theneeds of the ages.
Vaulted ceiling covered with colorful glass mosaic at the entrance (left)
and spiral-like inside stairs (right) giving retro feel.

TOPIC REPORT: Best Practices of Small-to-Medium-Sized Buildings – The 1st Report
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TOPIC REPORT｜Xymax Real Estate InstituteIV.

Tamaru Building (Tokyo)

Tamaru Building is located near Ogikubo Station – a convenient place at which both the JR line and the Tokyo
Metro line are available. However, it is outside of the JR Yamanote Line and hardly the central area for officebuildings. Catching the changes in social conditions in an agile manner, the company expanded its target tenants
inviting the start-ups and the businesses owned by the non-Japanese and addressing their disadvantages thatused to prevent them from renting a room. With its rent less expensive than that of the central Tokyo district
and original arrangements at making contract such as introduction of a guaranty company, the building
succeeds in operating in the state of full occupancy.

1. Profile of the building
Location: Suginami Ward in Tokyo (4-minute walk from Ogikubo
Station)Gross floor area: 1,100 square meters
The number of floors: 7 stories above the ground
Year built: 1970
Surrounding environment: Ogikubo Station is surrounded bybanks, hospitals, and many multiuse buildings inwhich restaurants occupy. Going through the
shopping street near the station, one can find a quiet
residential area. Tamanu Building can be found in aplace of 4-minute walk from the station, facing a trafficky major road “Kanjo-8 Line.”
The owner’s age: In his 30’s

2. Reasons for starting the efforts to achieve full occupancy
The company was engaged in construction business initially when the first owner started his own business. It
stepped into office leasing through making the rooms the company did not use available for rent, and now
operates apartment buildings and 3 commercial buildings for rent. The 3rd owner took over a post in 2016 andhas been exploring his own style of building management despite having much experience in the industry.
Through collecting information, he became aware of drastically changing environment around building
management and recognized strongly a necessity to respond to the changes in social environments, withoutbound by the conventional way of office building management. With office demand concentrating in the centerof Tokyo, Ogikubo – outside of the central district – is occupied with many offices of medium-sized companies
and rent is less expensive there. Thus, it is a good place for start-ups, however, not many buildings are available
for the non-Japanese business owners and those who started his/her own business after retirement. With thisbackground, the current owner started to consider accepting such newly established companies that haveabundant energy to push forward their business despite insufficient credibility. He assumed that accepting andsupporting them to deal with their disadvantages would lead to an increase in the occupancy rate andenhancement of the values of Tamaru Building.

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TOPIC REPORT｜Xymax Real Estate Institute
3. Efforts to achieve full occupancy
To achieve full occupancy, the company started a preparation process for earthquake-resistance rebuilding
and expanded its target tenants.
① Preparation process for earthquake-resistance rebuilding
Facing toward an emergency transportation road at disaster (Kanjo-8 Line), Tamaru Building isrequired to meet the new quake-resistance standards. Because the result of seismic diagnosis
indicated some parts not meeting the standards, the company started to consider how to achieve
seismic strengthening. Having the tenants occupying the building more than 20 years, the company
negotiated with the Suginami Ward Office to allow a refurbishment without a need of moving out,
through permission of step-by-step seismic retrofitting not meeting the quake-resistance standards
at once. Initially, the company was considering employing SRF (Super Reinforcement with Flexibility)
technique by which the columns of a building are wrapped in a polyester reinforcing material. This
technique would have costed the company approximately 20 million yen – about one tenth of thecost that would be caused by a conventional large-scale renovation. In addition, it would have beenpossible to progress the reinforcement work area by area and step by step. However, it was revealed
that the building had not received the certification of completed inspection when it had been built.
Because the certification of completed inspection is a requisite for receiving a subsidy but seismic
retrofitting will not give the company the certification, it gave up seismic strengthening and shiftedto rebuilding.
In the process, the company is changing the contracts with tenants to a fixed-term lease contract(currently, half of the tenants have changed to it), and preparing to start rebuilding by 2029 at thelatest. For the existing tenants, it is explaining the current condition of the building and the rebuildingplan.
② Expansion of the target tenants
Focusing on the social conditions including increased non-Japanese workers, a low birthrate and an
aging population, and changes in women’s workstyle, the company made a change in its way ofleasing. It started to target and invite start-ups that have abundant energy but insufficient credibility,
and to tie up with a guaranty company that supports dealing with troubles including back rent andproblems due to foreign language or customs. There have been no big troubles or back rent so far.
For problems like smoking in a restroom or staying a restroom for long which may be attributable toa different culture or lifestyle, the company puts up a notice to explain and announce the rules of thebuilding. Accepting the non-Japanese users has led to shortening of the invitation period. Also, thecompany created a mechanism whereby a tenant breaking a lease should introduce a new tenant.
Now the building is used by 6 non-Japanese tenants including restaurant and IT business (e.g. Chinese,
Nepali, and Korean).
Recently, a designing company comprised of 5 women moved in, and requested to improve theshared smoking space in addition to the painting of a door on the side of a shared space. After
preparing the operational system that allows comfortable use by the tenants and reconsidering theissues not documented in the building rules, the company decided to ban smoking in the entire
building.

TOPIC REPORT: Best Practices of Small-to-Medium-Sized Buildings – The 1st Report
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TOPIC REPORT｜Xymax Real Estate Institute
4. Cost, effects, responses, and other benefits regarding the efforts for achieving full occupancy
Because the efforts were made within the company’s regular budget, extrabudgetary costs were not needed.
The effects and responses are as follows:
Effects;The occupancy rate increased from 96% to 100%.
Before introducing the efforts, there was a time when the building had a room unoccupied for6 months at longest. Now its room is occupied as soon as it becomes available. One of therooms was occupied on the next day of the notification for availability.

Responses form the tenants;The tenants feel the building is comfortable because their requests are handled sensitively.
Many tenants said that the company was friendly for the non-Japanese who had tended to berefused to move-in.
Many existing tenants inquired of the company about vacancy with their hope to expand theirspace in the building, not to move out to another building.

Other benefits;Because the building invites the non-Japanese, there are many introductions from the realestate brokers and the neighboring community.

5. Change in the building values before and after the efforts for achieving full occupancy (theowner’s evaluation)
We asked the owner to evaluate the change of his building’s values before and after the efforts. The values ofthe building after the efforts are much greater than expected initially. The result shows that the company’s
original arrangements at making contract such as introduction of a guaranty company are successful.
Owner's evaluation on his building values

ビル

Building value perceived by tenants *2

テナン

Greater

Value after initiative

Building value perceived

Smaller

Greater by owner *1(Value expected

低beforehand)
Value before initiative

取り組み前の価

Smaller*1 Building values perceived by the owner: Property value, profitability, reduction in the operational costs, etc.
*2 Building values perceived by the tenants: Comfortability, satisfaction in terms of usage or needs, etc.
* We asked the owner to evaluate the values of his building assuming that the point at the intersection of the two lines
represents the average values of the surrounding buildings.

TOPIC REPORT: Best Practices of Small-to-Medium-Sized Buildings – The 1st Report
The contents of this report are as of the time of writing. Xymax Real Estate Institute does not guarantee their accuracy or completeness. This report may not be
reproduced, cited, transmitted, distributed, or reprinted without prior permission of Xymax Real Estate Institute.
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TOPIC REPORT｜Xymax Real Estate Institute
6. The owner’s comments on his initiative toward achieving full occupancy and future building
management
We own rental housing in addition to office buildings for rent, and attempted to increase the occupancy rate
in housing initially. In general, the elderly living alone and the non-Japanese people have a difficulty to move ina housing for rent. With aging society and increased number of foreign workers and students, we recognized
an importance to take in their demands. We made clear the difficulties they had at moving-in and sought forthe solutions. To address issues such as ensuring safety and checking of health conditions of the elderly users,
troubles that might be caused by a different culture or lifestyle of the non-Japanese occupants, and fidelity
guarantee, we tied up with a guaranty company and started making contract with our new tenants throughdiscussion with the firm. Although there were some troubles after their moving-in, most of them were caused
by insufficient understanding of the rules. Thus, a good explanation allowed the persons conform to the ruleswith no problems. Knowing the keys to deal with beforehand, we become ready for accepting the elderly andthe non-Japanese users, being free from a preconceived image of them.
The usage of a property around Ogikubo is changing. Many potential tenants used to request a parking area
as a requisite, however, there are increasing number of tenants who do not use a parking area but request abicycle parking these days. Their requests are changing day by day, and such changes in the usage of a property
must get faster and faster from now on. Also, near future, the facilities employing Internet of things (IoT) and/or
artificial intelligence (AI) would be introduced in operation and management of the small-to-medium-sizedbuildings. Virtual reality (VR) preview, explanation of important matters utilizing IT, and e-contract will enablemaking a contract with a remote user. Operational efficiency in building management will be advanced further
by use of smart meters and other technologies. Catching these changes in an agile manner and making use of
the knowledge for future building management, we hope to achieve a new business expansion.

TOPIC REPORT: Best Practices of Small-to-Medium-Sized Buildings – The 1st Report
The contents of this report are as of the time of writing. Xymax Real Estate Institute does not guarantee their accuracy or completeness. This report may not be
reproduced, cited, transmitted, distributed, or reprinted without prior permission of Xymax Real Estate Institute.
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TOPIC REPORT｜Xymax Real Estate InstituteV.

Fuji (Alt Kobe) Building (Kobe City)

Fuji Building is a complex building aged more than 50 years, with offices and commercial tenants in the lower
stores and rental apartments in the upper stores. In 2012, the current owner purchased the residential floors
from Urban Renaissance Agency (UR) and started to manage the whole building. Though making theresidential floors profitable by unique refurbishment (DIY) and a changed marketing strategy, plus facilitating
communications and integration among the old and new tenants with its efforts including utilization of acommunication tool, the company succeeded in regeneration of its building.

1. Profile of the building
Location: Kobe City, Hyogo Prefecture (3-minute walkfrom Sannomiya Station)
Gross floor area: 3,435.55 square meters
The number of floors: 6 stories above the ground and 1
underground story
Year built: 1961
Surrounding environment: The building is located in
Sannomiya – the center of Kobe City where
Hanshin, Hankyu, JR, subway, and Port Islandlines are available. It is surrounded by officebuildings and City Office as well as shopping facilities such as SOGO department store.
The owners’ age: In his 70’s and in his 20’s (acting owner)

2. Reasons for starting the initiatives toward building regeneration
When newly built, it was a Jointly owned building of which the 3 rd to 6th stores were the residential floors
owned by the Public Housing Corporation (later transformed to “UR”) and the underground to the 2nd stories
were owned by the current owner. In February 2012, Urban Renaissance Agency (UR) sold all its properties tothe owner, and he manages whole the building currently. From the underground to the 2nd floors, a restaurant,
an English conversation school, a hair salon, and offices occupy the spaces to keep the occupancy rate of 100%.
On the other hand, of the 36 apartments, one-third was used
continuously by the occupants since the time of UR, and the other twothirds were not occupied.
At the beginning, the company started to invite a user for arenovated room for which it had renewed the interior finish at great
expense, although it took a long time for the room to be occupied.
With the poor cost efficiency, the company determined to reconsider
its marketing strategy totally.
Doorplate that keeps a trace of UR’s
ownership

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TOPIC REPORT｜Xymax Real Estate Institute
3. Refurbishment and change of marketing strategy for the residential floors
The details of the initiatives toward the residential floors【Inviting tenants who appreciated an old building】 The building is located in a convenient place where
one can walk from Sannomiya Station in 3 minutes. (There is no other rental housing closer to Sannomiya
Station than Alt Kobe.) At first, the company targeted people who appreciated this location, andrefurbished the interior finish in the shared spaces and the residential areas. The owner thought thatdoing refurbishment by themselves would save the costs and it would become a uniqueness to appeal
to potential users. Thus, the company determined to target not everyone but sensitive and creative
persons, and to propose another use of its room as a small office/home office.
【Design utilizing DIY and old tastes】 The owner possesses a qualification of welder and can produce
many things by himself. He tried to achieve a natural design that utilized old and antique tastes of thebuilding, not denying oldness.
The owner repaired and created lights
and walls in the shared spaces, interior
finishes and entrances in theapartments, and bike shed by himself.
He made use of the bowls purchasedin a 100-yen shop as the lampshades Lampshade made of a bowl
in the staircase landings, and coated purchased in a 100-yen shop
the walls of the shared spaces with apaint containing plaster thatabsorbs smell and humidity andmakes them look thicker andwarmer.

Door coated with a paint containing
plaster having a warm feel, and a flower
stand utilizing an old milk-bottle post

Interior finish of the apartments
used to be Japanese style but wastransformed to Western style; bychanging “tatami” mats to wooden
floors, and utilizing "fusuma" doors
Industrial sinkbut changing the paper to a natural
wood panel. For washing spaces,
the company regarded thefunctionality as the highest
priority
andinstalledanundecorated industrial sink andwashbasin. Hooks to hang alaundry line inside a room and amilk bottle post beside a front
door were not removed for theoccupant to enjoy making use ofRetro corridor
Bike shedthem creatively as the hooks tohang a hammock and a flower stand, respectively, In a room, the company reinforced the floor of “oshiire”(closet) for an occupant who hope to use it as a bed. In addition, the owner prepared a bike shed to meetthe needs from the users who commute by bike, by welding a commercial bike stand and the frames.
The apartments with such delicate finishes met the unique needs of people who hope to enjoy oldness
and accommodate it to fit their tastes.

TOPIC REPORT: Best Practices of Small-to-Medium-Sized Buildings – The 1st Report
The contents of this report are as of the time of writing. Xymax Real Estate Institute does not guarantee their accuracy or completeness. This report may not be
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TOPIC REPORT｜Xymax Real Estate InstituteEffects and responses regarding the initiatives toward the residential floors
The occupancy rate increased gradually, and a vacant room got to be occupied immediately afterrefurbishment. Now a vacant room advertisement usually leads to 5 to 6 inquiries, resulting in waiting
applicants.
By conducting most of the refurbishment processes internally, it (cost of materials) costed only one
third of the expenses that may be needed for outsourcing.
Effect;

The rent rose more than 10%.

Responses from the tenants;Some tenants use their rooms as a small office/home office. Many of them have creative andunique occupation such as designer, property or restaurant owner, and artist. The communications
among them developed into business meetings.
The occupants nourish a ”culture of creation” by themselves. Their devices such as a room
equipped with IoT and a use of a milk bottle post as a flower stand are shared and lead to anotherdevice to interior finish.

4. Communications among the old and new occupants
The details of the initiatives toward communications among the old and new occupants
Having commercial tenants and new occupants of apartments with a range of their age and a variety ofroom usages, the company believed that communications and integration of the old and new tenants
would lead to a regeneration of its building.
【Preparation of the communication spaces】 The company prepares a refreshing space on the top floor
and a BBQ space on the rooftop deck where the tenants can have a party. Most of the fixtures includingtables and lighting were created internally by the company. The space is equipped with rice cooker, jaozi
pan, refrigerator, and dishes for having a party. On the rooftop deck, there is a space for vegetable garden.

Refreshing space on the top floor

BBQ space on the rooftop deck

【Introduction of a communication tool】 The acting owner (son of the owner) taking in charge of thebuilding operation since 2019 started new efforts to facilitate communications among the occupants. He
introduced a smartphone app called “Slack” (free of charge) as a communication tool for the purposes ofmaking reservation of the refreshing space, sending messages from the owner (e.g. notification of thedate of inspection or power outage), and others. In addition, the company hold parties in occasions suchas Christmas and “mochi” (rice-cake) making for communications among the occupants.

TOPIC REPORT: Best Practices of Small-to-Medium-Sized Buildings – The 1st Report
The contents of this report are as of the time of writing. Xymax Real Estate Institute does not guarantee their accuracy or completeness. This report may not be
reproduced, cited, transmitted, distributed, or reprinted without prior permission of Xymax Real Estate Institute.
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TOPIC REPORT｜Xymax Real Estate InstituteEffects of the initiativesNot only the new users of the apartments but also the occupants since the time of UR participatedin the events the company held. As a result, they understood each other much more, which led to notroubles and claims among them. The initiatives also facilitate good relationships between theapartment users and the commercial users: There are good effects such as more frequent visits tothe commercial tenants by the apartment users and an introduction of a tenant leading to a newoccupancy.
Some apartment users said that they became to live more comfortably because now they canunderstand their neighbors.
Many of the both commercial and apartment users satisfy with the BBQ and refreshing spaces which
they can use for culture lessons or communications among their employees.



Besides an app introduced by the company, there is a spontaneous Facebook group of the tenants,
where a circle of the multidisciplinary tenants not involved directly in each other’s business urges anintroduction of jobs and exchange of ideas.
The website of Kobe City introduces the company’s initiatives as an example of communications
among the tenants.

5. Change in the building values before and after the initiatives toward building regeneration(the owner’s evaluation)
We asked the owner to evaluate the change of his building’s values before and after the initiatives towardbuilding regeneration. Because the acting owner took over the operation in the process of the initiatives anddefined future value as their objective, his perception of his building’s achievement was moderate.
Owner's evaluation on his building values
Building value perceived by tenants *2

Greater
Future value(Value expected
beforehand)

Value after initiative

Greater

Smaller

Building value perceived
by owner *1

Value before initiative

Smaller*1 Building values perceived by the owner: Property value, profitability, reduction in the operational costs, etc.
*2 Building values perceived by the tenants: Comfortability, satisfaction in terms of usage or needs, etc.
* We asked the owner to evaluate the values of his building assuming that the point at the intersection of the twolines represents the average values of the surrounding buildings.

TOPIC REPORT: Best Practices of Small-to-Medium-Sized Buildings – The 1st Report
The contents of this report are as of the time of writing. Xymax Real Estate Institute does not guarantee their accuracy or completeness. This report may not be
reproduced, cited, transmitted, distributed, or reprinted without prior permission of Xymax Real Estate Institute.
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TOPIC REPORT｜Xymax Real Estate Institute
6. The acting owner’s comments on their initiatives toward building regeneration and futurebuilding management
There are things we can do because the building is old. Preserving useless parts and figuring out how to usethem creatively may lead to uniqueness of the building. We hope to continue our effort to harmonize
functionality and sophisticated design. In this building, communications among the occupants are facilitated
and further spontaneous efforts and creativity are generated. While there are increasing number of coworking
spaces and shared offices in Sannomiya, we would like to offer much better operation of our building than thatof them. Currently, Fuji Building can be used as each user likes without restrictions, and there are no rules formany issues. However, it might be easier to be used if there were rules for the issues like how to use. So, we
would like to prepare the rules and other mechanisms to make the building more attractive. In addition, we
would start working on enhancement of the facilities and repair of the unexposed components. To secure thebudget for these initiatives, we will prepare a mid to long-term repairing plan.

Acknowledgements:
We gratefully acknowledge the cooperation of the building owners, the operation companies, and otherrelated persons who provided information for this report.

For further inquiry please contact:
Xymax Real Estate Institutehttps://soken.xymax.co.jp

E-MAIL: info-rei@xymax.co.jp

TOPIC REPORT: Best Practices of Small-to-Medium-Sized Buildings – The 1st Report
The contents of this report are as of the time of writing. Xymax Real Estate Institute does not guarantee their accuracy or completeness. This report may not be
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