Ginza, Tokyo, Japan, is a world-famous commercial block. Most Japanese merchants are proud to be able to settle in Ginza. However, the latest statistics released this month show that the vacancy rate of Ginza stores reached 2.6% at the end of September, up 0.9 percentage points from the end of June.
Why does the vacancy rate of Ginza stores rise?
In Tokyo’s famous Central Street in Ginza, the reporter observed that the shops facing the street, especially the golden store in Tokyo – the first floor, which is easiest to attract customers, one of the stores has closed, and the door has posted a farewell message, which reads in Japanese: 17 years, thank you for your support.
Through the glass window, the reporter saw that the store was tearing down the old decoration, and there was a lot of rubble scattered on the ground.
The reporter learned that the restaurant had coordinated with the owner to reduce the rent, and because the two sides failed to negotiate, the restaurant had to withdraw. Examples like this are not uncommon in Ginza this year.
Affected by the pandemic, well-known brands withdrew from Ginza, closed centennial stores, landmark buildings changed owners, and major department stores performed poorly, making Ginza, which has always prosperous, show a depression. The vacancy rate of the first floor storefront facing the street in Ginza also rose to 2.6%.
According to the investigation, 20% of tenants have considered sling the contract, and about 90% of them have proposed to reduce the rent. Affected by this, the rent of the first floor of Ginza has declined significantly. At present, the monthly rent has dropped to 82,000 yen per square meter (About 800$).
In fact, this trend has appeared before. At the end of September, Japan’s Ministry of Land, Infrastructure and Transport announced the national benchmark land price for 2020, and Japan’s national commercial land price fell for the first time in five years. Of the 10 locations with the largest decline, 4 are in Ginza.
Affected by the pandemic, it is difficult for tourists visiting Japan to recover. The industry originally expected that the demand of stores would warm up by domestic consumption in the shopping season at the end of the year. However, on the 19th, the number of new infections in Tokyo soared to 534, setting a record high since the outbreak for two consecutive days, casting another shadow on the outlook of the store.
In response, the Japanese government revealed on the 19th that it is considering adjusting the collection of fixed asset tax on commercial real estate next year to relieve the pressure on shops and tenants. However, half of Ginza’s tenants now say that it is difficult to determine whether to continue to rent stores here even after the pandemic subsides.
Some analysts in the industry believe that the recovery of the high-end store market represented by Ginza will take a long time. Some large real estate developers even point out that as long as you rent Ginza’s storefront, the era of easy to make money with location advantages is probably over.