July 14, 2014
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Companies are grouped into four types
based on how they choose office space to rent.
What are the important criteria at the beginning and at the end of the office choosing process?
Xymax Real Estate Institute regularly conducts survey with office tenants in buildings managed by Xymax Group on
various topics including how they chose their office.
This research report is based on the data obtained from the survey. We have analyzed the important criteria for whencompanies start considering an office space to rent and when they finally decide which office space to take. Below is thesummary of the outcome.
Companies generally occupy an office space for an average of ten years; therefore it may be difficult for companies
without a relocation team to accumulate how-to and knowledge in choosing an office space. This research report may bereferred to by companies as a reference for efficient relocation, and also provides hint for building owners in making theiroffice preferred to by future tenants. The clustering analysis in this analysis was jointly-conducted with the laboratory of Dr.
Naoki Katoh, Professor at Graduate School of Engineering, Kyoto University.

Key Findings
Important criteria for office space vary by stage of office choosing process.


Earthquake resistance is now a must criteria.
“Area” “Office Size” and “Rent” are important criteria at the beginning.
Final criteria are varied with some criteria more focusing on the impressive features.

 We collaborated with the laboratory of Dr. Naoki Katoh at Kyoto University and grouped the companies
into four types based on their criteria for office space.

Outline of Analysis
Survey Period
Subject Companies
Subject Area
Type of Survey

Survey Topics

Analysis

August 2010 – December 2013155 companies signed new lease for office space in buildings managed by Xymax Group.
Greater Tokyo (mainly Tokyo 23 Wards)
Face-to-face interview• Reasons and background of relocation• Conditions and problems of office before the relocation• How did the company find the office space• Important criteria at the beginning (“Initial Criteria”). Important criteria for making final
decision (“Final Criteria”). Number of candidate office spaces. Number of spaces
visited. Duration from the start of considering relocation to the final decision making.
Whether used internet or not during the office choosing process. Route of broker.
Obstacles during the office choosing process.
• Number of office workers. Experience of relocation. Other topics.
Clustering by Ward’s method
Clustering: The task of grouping a set of data or cluster based on similarity or non-similarity
Ward’s method: One of the methods applied in hierarchical clustering. The distance between
clusters is defined based on the within-cluster variance when clusters merge. Mergers start from apair of clusters with minimum distance.

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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Important criteria for office space varies by stage
Earthquake resistance is now a must criteria

Reasons for relocation before and after theFigure 1: Reasons for Relocation (Multiple Answers)

March 2011 earthquake are shown in Figure
1. The graph indicates an increased numberof companies have relocated due toconcerns over earthquake resistance after
the earthquake. A high degree of attention
from tenants regarding earthquake
resistance of office buildings is also clear
from our other research, Office Disaster
Prevention Survey 2013*, in which over 90
percent of companies replied that groundstability and earthquake resistance ofbuildings are important when choosing office.
But even so, the relocation survey interview
in this research revealed that earthquake
resistance is rarely included in the criteria foroffice space (see Figure 2 and Figure 3). This is probably because earthquake resistance is now, although needless to say,a must criteria for office buildings, and it is no longer something tenants decide whether it is important or not.
* Press Release October 11, 2013 http://www.xymax.co.jp/english/research/release/131011.html

Area, Office Size and Rent are important at first, but impressive features are more appreciated in
final decision making.

We interviewed with companies about

Figure 2: Criteria for Office Space (Multiple Answers)

their important criteria at the beginning oftheofficechoosingprocess(InitialCriteria) and also the important criteria inmaking final decision (Final Criteria) andsummarized the results in Figure 2. The
list covers a wide range of criteria, but thethree most important criteria at thebeginning are clear: Area, Office Size,and Rent, as companies generally decideto some extent of these three before
requesting brokers to find candidates. On
the other hand, major Final Criteria otherthan Rent include Convenient Floor
Shape, Brightness, Cleanness and more,indicating that tenants actually visit thecandidate office sites, and impression
from the site visits is important infinalizing their choice.

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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Companies are grouped into four groups based on criteria for office spaceAs a first step, criteria are classified into six categories: Area, Office Size, Rent, Convenience,
Comfortability or Safety

Criteria other than the three most important factors (Area, Office Size, and Rent) are classified into “Convenience”,“Comfortability” or “Safety”, and summarized again based on Initial/Final Criteria as shown in Figure 3. The figure
indicates an increase of Comfortability at the final stage.
Classification Details
Classification

Criteria

Comfortability

Building Grade, New Building, Brightness, Cleanness, Toilet, Air Conditioning Type,
Floor-by-floor Lease, Other Tenants in Building, View from Window

Convenience

Distance from Station, Easy to Find / Along Major Road, Neighborhood Environment, Convenient
Floor ShapeRaised Floor / Electrical Capacity / Telecommunications, Floor Location, Parking Spaces

SafetyEarthquake Resistance / Ground Stability / Disaster Prevention, Security

Figure 3: Initial Criteria & Final Criteria by Six Categories

Note: On the right chart, the numbers for Area,
Office Size, and Rent are the ratio of number ofcompanies. Convenience, Comfortability and Safety
are the ratio of total number of answers/number ofcompanies.

Companies are grouped into four types based on the six classified criteria by using clustering
method.

Based on the classified criteria in Figure 3, we have conducted clustering with the laboratory of Dr. Naoki Katoh, Professor
at Graduate School of Engineering, Kyoto University to group the companies into four types: “Generous”, “Standard”,“Persistence”, or “Passive”. Figure 4 explains the difference between Initial and Final Criteria for each type.

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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Figure 4

Characteristics of each typeNow we look into the details of each type including their criteria for office, reasons for relocation, use of office, and othercharacteristics. See Figure 5.
Generous Type: Rent is not an important criteria initially as well as finally. Many companies in this type relocated toexpand office size (positive reason). Their client companies often visit the office. Conveniently locatedbuildings such as buildings near the station are preferred.
Standard Type: At first, companies in this type put priority on the size of office space and rent, but at last theychoose office based on comfortability and convenience, which is a standard way of choosing office. Suchcompanies relocate for positive reasons including expansion, better location, and earthquake resistanceconcerns. Branch offices or sales representative office of large and old companies tend to fall into this type.
Persistence Type: Rent is important both initially and finally, but comfortability is also important when finalizing thechoice. Reasons for relocation are a mix of positive and negative factors from expansion to better facility
and cost-cutting. Small- and medium-size companies with office-based workers tend to fall into this type.
The number of site visits before deciding the office is also the highest of all the four types.
Passive Type: Have a short list of criteria at both initial and final stages. Companies in this type relocate forsomewhat negative reasons such as cost-cutting or consolidation of multi-site offices. Workers consist
mainly of sales representatives who are often away from office to visit clients. Rent is the top priority;
therefore offices slightly away from the station are acceptable as long as the rent is affordable.

No distinct tendency between the four types regarding the type of business of tenants or size of office building wasobserved.

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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Figure 5
Type

Criteria for Office

Reasons forUse of Office

Notes (Other Characteristics)

Relocation

Generous
16% of total(n = 25)

Initial:Many cases ofArea, Office Size

expansion

Final:

Positive reasons

Visitors from

Tenant’s Business: Mixed

outsideBuilding:
Average Gross Floor Area (GFA) is 3,034
tsubo
Average of 3 minutes’ walk from theConvenience,nearestComfortabilitystation.

(Buildingnearthestation)
Contract:

Rent is not very

Expansionfromprevious

important at any stages

office. Rent per tsubo has decreased.

of the choosing process●Highest average rent per tsubo among
all the four types

Standard
27% of total(n = 42)

Initial:ExpansionArea, Office Size, Rent

Better location

visitors from

Earthquake resistance
Final:

concerns

Convenience,
Comfortability

Tenant’sMix ofTend to have positive

SlightlylargerBuilding:
outside,Average GFA is 3,390 tsubo

office-based

Average of 3.5 minutes’ walk from theworkers,

sales

nearest station
Contract:

reasons

Business:

number of wholesalers

Expansionrepresentativeoffice.

officeincreased or decreased

Rent

perfromtsubo

previoushaseither●Large companies●Most are non-head office.

Persistence
30% of total(n = 46)

Initial:Area, Office Size, Rent

Mix of cost-cutting,

Office-based

expansion, and better

workers

facility

Tenant’s

Information

Business:

technology

companies

andacademy/research, etc.
Building:

Final:

Average GFA is 3,255 tsubo.

Comfortability, Rent

Average of 4.1 minutes’ walk from thenearest station

Have a long list ofContract:

criteria.

Expansion

frompreviousoffice. Rent per tsubo has decreased.
●Small- or medium-size companies●Lowest average rent per tsubo among
all the four types.
●Many site visits to candidate offices

Passive
27% of total(n = 42)

Initial:Cost-cutting

Area, Convenience

Multi-site consolidation

Final:

Tend to have negative

Comfortability, Rent

reasons

Sales

Tenant’s Business: Mixed

representative

Building:

officeAverage GFA is 3,341 tsubo
Average of 4.5 minutes’ walk from thenearest station.

(Building somewhat

away from the station)
Contract: Downsizing from previous
office. Rent per tsubo has decreased

Note: This survey is based on the relocation data of 155 companies. Please understand that the grouping may not apply depending on
the conditions of each company or office market changes in the future.

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.

5Conclusion
This research grouped companies into types based on their priority when choosing office and then analyzed thecharacteristics of each type. Companies considering relocation can use this analysis as a reference to clarify their priority.
Building owners can use this analysis as a hint to improve variable factors such as comfortability and convenience of theiroffice building or enhance approach to prospective tenants by understanding their behavior quickly.
Xymax Real Estate Institute will continue to study how prospective tenants choose their office space from a variety ofstandpoints and provide useful information to both companies and building owners.

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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