September 19, 2014

For further inquiry please contact:
Xymax Real Estate Instituteinfo-rei@xymax.co.jp

Xymax New Contract Rent Index
A new index reflecting the actual office space market
Xymax Real Estate Institute has developed an index based on contract rent of office spaces. The index,
named Xymax New Contract Rent Index, will be released online on a quarterly basis.
Office rents are important for the real estate industry because they are the source of revenue for property
owners and investors as well as for those involved in the real estate business. Office rents are equallyimportant for general companies too, because they are the cost paid for the place where companies dobusiness. An analysis of office rents that appropriately reflects the market is very much needed. Developing
such analysis, however, requires enormous volume of data and statistical processing, which may beobstacles to the development.
Xymax New Contract Rent Index is unique because:1)

It is based on contract rent from actual transaction data: not asking rent which most other rental
indexes are based;2)

It is analyzed by the hedonic approach; therefore factors that influence the rent, such as gross floorarea and age of the buildings, are adjusted and property-specific influences are removed; and3)

Changes of market structure are appropriately reflected through serial statistical processing.

Figure 1 shows the results. Details are discussed in the following pages.
Figure 1: Xymax New Contract Rent Index (Tokyo 23 Wards, Q1 2001 – Q2 2014)

Overview and numerical data of the index are provided at the end of this report.

The information contained in this report is as of the date of preparation. XYMAX accepts no liability for any inaccuracies or omissions in this report.
No copying, quoting, forwarding, distributing, reprinting or any other use of this report is allowed unless prior consent from XYMAX is obtained.
Copyright © XYMAX Corporation. All rights reserved.

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Contract rent is increasing at a moderate pace after hitting bottom in Q2 2012
Figure 2 shows Xymax New Contract Rent Index for all the buildings from the first quarter of 2001 to thesecond quarter of 2014. Contract rent is showing cyclical ups and downs.
Q2 2014 marked 91 (based on Q1 2010 = 100), a decrease by 3 points quarter-on-quarter and an increase of
10 points year-on-year. After hitting bottom in Q2 2012 at 76, the contract rent is gradually increasing.
Figure 2: Xymax New Contract Rent Index (Tokyo 23 Wards)

Large buildings suffer higher volatility than small and medium buildings
Figure 3 shows the index by size of buildings: large buildings with over 5,000 tsubo of gross floor area (about
16,500 sqm, 1 tsubo = 3.3 sqm) and small and medium buildings with less than 5,000 tsubo of gross floorarea. The highest point for large buildings was 190 and the lowest was 76, whereas the highest point for small
and medium buildings was 146 and the lowest was 79, indicating that rent of large buildings are more volatile
than small and medium buildings.
Figure 3: Xymax New Contract Rent Index by Large Buildings and Small/Medium Buildings (Tokyo 23 Wards)

The information contained in this report is as of the date of preparation. XYMAX accepts no liability for any inaccuracies or omissions in this report.
No copying, quoting, forwarding, distributing, reprinting or any other use of this report is allowed unless prior consent from XYMAX is obtained.
Copyright © XYMAX Corporation. All rights reserved.

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Up and down cycle (comparison with Contract Rent DI)
Contract Rent Diffusion Index (“DI”)* is another quarterly index developed by Xymax Real Estate Institute. DIshows trends of increases and decreases of contract rent. In Figure 4, DI and Xymax New Contract Rent
Index are combined into one graph.
When DI is positive, the contract rent index increases; when DI is negative, the contract rent index decreases.
When DI is a large number, the contract rent index changes rapidly; when DI is a small number, the contract
rent index changes slowly.
DI for Q2 2014 was 19; which means there were slightly more buildings with rent increase than buildings withrent decrease in the quarter. DI turned positive in Q1 2013 and continued to increase since then. Increase ofcontract rent index is, although slowly, becoming stronger now.
This combined graph enables multi-sided analysis of the office space market.
* Contract Rent DI (Q2 2014): http://www.xymax.co.jp/english/research/release/140806.html

Figure 4: Contract Rent DI and Xymax New Contract Rent Index (Tokyo 23 Wards)

The information contained in this report is as of the date of preparation. XYMAX accepts no liability for any inaccuracies or omissions in this report.
No copying, quoting, forwarding, distributing, reprinting or any other use of this report is allowed unless prior consent from XYMAX is obtained.
Copyright © XYMAX Corporation. All rights reserved.

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Index Overview
Name
Use of Building
Area
Report Frequency
PeriodData Source

Data VolumeXymax New Contract Rent IndexOfficeTokyo 23 Wards
Quarterly
Q1 2001 - Q2 2014 (to be updated quarterly)
Data of rent per tsubo (incl. common area maintenance charge) agreed in contract,collected by Xymax
30,610 (Q1 2001 – Q2 2014)
Reference example: 858 in Q2 2014, 822 for the last four-quarter average
Overlapping period hedonic model

Analysis Method(Overlapping period: five quarters)

Contract rents estimated by substituting the scores of factors of typical buildings (shown at thebottom of this table) into the regression model and presented in index set to 100 in the base period.

Data Breakdown
BaseAll the buildings / Large buildings / Small and medium buildings
Q1 2010 = 100
Objective variable: Contract rent per tsubo (logarithm)
Explanatory variables: Tokyo 3 Wards dummy, gross floor area (logarithm), floors above ground,

Variables

typical floor area (logarithm), minutes from train station, age of building as of lease contract, raised
floor dummy, individual air conditioner dummy, automatic security system dummy, renovation
history dummy, large building dummy (over 5,000 tsubo) and date of contract signed dummy
All the buildings:
Tokyo 3 Wards (Chiyoda, Chuo, Minato), gross floor area 5,000 tsubo, 12 floors above ground,
typical floor area 250 tsubo, 3-minute walk from train station, 15 years of age, raised floor, individual
air conditioner, automatic security system, before renovation.

Large buildings:

Typical Building

Tokyo 3 Wards (Chiyoda, Chuo, Minato), gross floor area 20,000 tsubo, 25 floors above ground,

Based on Breakdown

Typical floor area 500 tsubo, 3-minute from train station, 10 years of age, raised floor, individual airconditioner, automatic security system, before renovation.

Small and medium buildings:
Tokyo 3 Wards (Chiyoda, Chuo, Minato), gross floor area 1,500 tsubo, 9 floors above ground,
typical floor area 100 tsubo, 3-minute walk from train station, 15 years of age, raised floor, individual
air conditioner, automatic security system, before renovation.

•The original research report in Japanese and translated reports in Chinese and Korean are also available
online.
Japanese http://www.xymax.co.jp/Chinese http://www.xymax.co.jp/cn/index.html
Korean http://www.xymax.co.jp/ko/index.htmlThe information contained in this report is as of the date of preparation. XYMAX accepts no liability for any inaccuracies or omissions in this report.
No copying, quoting, forwarding, distributing, reprinting or any other use of this report is allowed unless prior consent from XYMAX is obtained.
Copyright © XYMAX Corporation. All rights reserved.

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Xymax New Contract Rent Index
Numerical Data
Q1 2001 Q2 2001 Q3 2001 Q4 2001 Q1 2002 Q2 2002 Q3 2002 Q4 2002 Q1 2003 Q2 2003 Q3 2003 Q4 2003
ALL

117

115

123

115

127

120

109

105

105

99

98

96

Large

118

110

114

114

106

103

102

93

101

92

87

104

Small/Medium

118

116

121

114

123115105103

105

10010098

Q1 2004 Q2 2004 Q3 2004 Q4 2004 Q1 2005 Q2 2005 Q3 2005 Q4 2005 Q1 2006 Q2 2006 Q3 2006 Q4 2006
ALL

97100102

95

99

101

101105

116

118

120

129

Large

93

105

96

94

106

111

108

113

125

124

135

138

Small/Medium

99

102

103

97

101

101

101104

113

114

115

120

Q1 2007 Q2 2007 Q3 2007 Q4 2007 Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009
ALL

135

139

150

147

146

161

148

145

129

117

111

109

Large

137

161

165

164

187

190

143

169

124

134

110

107

Small/Medium

127

129

137

134

134

146

137

137

125

116

111

108

Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012
ALL10096100949391

939085768283

Large

10095969392919387

9676

8988

Small/Medium

10096

100

9694

94

96

9388

798687

Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014
ALL938187

87

94

91

Large

9682

90

88

9797

Small/Medium

978491909794The information contained in this report is as of the date of preparation. XYMAX accepts no liability for any inaccuracies or omissions in this report.
No copying, quoting, forwarding, distributing, reprinting or any other use of this report is allowed unless prior consent from XYMAX is obtained.
Copyright © XYMAX Corporation. All rights reserved.

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