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Consolidate or disperse? The big question facing the Japanese office

In a bid to become more flexible, diverse and productive, Japanese companies are facing a choice between consolidating their head offices or dispersing to other spaces in the suburbs, according to a research report by Xymax Real Estate Institute

As 2020 shapes up to be a pivotal year for Japan’s much-heralded shift towards a more flexible workstyle, a new research report from Tokyo’s Xymax Real Estate Institute gives an insight into how committed Japanese companies are to reforming their workplace strategies – and what they are doing in practice.

In advance of the world’s spotlight settling on Japan ahead of the Tokyo Olympic and Paralympic Games 2020, the Japanese Government, fearing urban gridlock, has already passed a work reform bill calling for a doubling of teleworking.

However, the Xymax report, The Shape of the Office of the Future, presents data showing that although two-thirds of Japanese have made some kind of investment in ICT to support teleworking, only a quarter of firms are actually providing places or programmes for telework. This suggests the level of preparedness in not high with regard to the adapting the physical office.

Motivations for change

The research indicates the motivations for why Japanese companies might want to rethink their notoriously inflexible and hierarchical work culture, with long commutes and employee burnout. More than 70 per cent of firms want to improve productivity, and more than 60 per cent want to boost employee satisfaction or achieve more efficiencies.

However, factors such improving customer service or promoting innovation and new business score lowest, indicating that many Japanese firms have an underdeveloped sense of how workplace design can influence the performance in the wider market. Given Japan’s ageing population, lack of immigration and resulting labour shortages, it is perhaps no surprise that the focus is squarely on the workforce and not on externalities. Finding ways to create a more diverse workforce in terms age, gender and ability is clearly a priority.

‘Japan cannot simply cut and paste its manufacturing format into the office…’

Reassuringly, 80 per cent of companies now place importance on soft, intangible factors such as employee comfort and motivation in the workplace – a recognition that Japan has recognised that it cannot simply cut and paste its successful organisation of manufacturing into the office environment. The focus today is on raising what the Xymax report calls ‘intellectual productivity’, generating new ideas, ingenuity and originality in ‘intellectual production plants’.

An open question

What real estate strategies Japanese firms should adopt in the future to achieve this new approach is an open question.

The Xymax report suggests that many companies will hedge their bets between consolidating their head offices in city centres and adopting a dispersal strategy which involves the use of range of alternative spaces such as branch and serviced offices, research facilities, and the home.

This seeming duality between consolidating offices and dispersing them is what makes the next phase of Japanese workplace development so interesting. The strengths of consolidated offices lie in shared vision, more communication and collaboration, better employee wellbeing and retention, and innovation creation. Dispersed offices, however, promise improved time efficiencies without the long commute into the city centre, better work-life balance and a more refreshed workforce better able to care for children and elders.

Indeed, the report notes the expansion in Japan of what it terms of the ‘third-place market’ of flexible workspaces – which is so central to any dispersal strategy. This now accounts for 0.5 per cent of Greater Tokyo’s rental office market (compared to 1.7 per cent in Manhattan), bringing the real-estate-as-a-service concept to one of the world’s most traditional sectors in many forms from shared satellite offices to coworking venues.

Clearly, in the pivotal year of 2020, major changes are on the way in the Japanese workplace. Xymax’s study. The Shape of the Office of the Future, suggests which way the wind might be blowing. Access the report here.

Xymas Real Estate Institute will be participating in WORKTECH Tokyo 2020, which will be held on 2 April in Toranomon Hills. More information here
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