|United Nations University - Work in Progress Newsletter - Volume 13, Number 3, 1991(UNU, 1991, 12 pages)|
By Shigeru Itoh
The great demand for office space in central Tokyo has led to a voracious rush by real estate developers for tiny pieces of the city's land still owned by individuals. This has been fed by the extremely low interest rates of Japan's bankers. Developers have borrowed money at low interest rates in order to buy small land parcels at high prices. This ratcheting up of prices is discussed by Professor Shigeru Itoh of the University of Tokyo. - Editor
Tokyo is the centre of the Japanese economy - where most of the nation's final business decisions, domestic and international, are conducted and concluded. That this is so might be taken, on the one hand, as an argument to support and strengthen the Japanese economy. On the other hand, It might be argued that such a monopolar concentration of business functions is stimulating an exaggerated level of office demand within the central business district. According to recent reports, the office floor area of four wards in Tokyo's central business district have greater value than the whole of the office floor area available in all of Manhattan in New York City.
Land Price "Wars"
The high demand for large office building has inevitably led to the acquisition of land that had previously been extremely fragmented and privately owned. All this has stimulated a shift from private to corporate ownership. But in this process of collecting small and fragmented land parcels, some extremely fierce land investment activities have resulted.
The interest rates offered by Japanese banks have been extremely low by international standards. Taking advantage of this, some developers have engaged in an activity known as "land-price hiking." Such developers have borrowed money at low interest rates to buy small land parcels at high prices. These parcels are then pieced together and sold off to larger real estate agents at much higher prices. Office buildings constructed on such land naturally must charge very high rents.
Various urban planning countermeasures have been enforced to halt the skyrocketing office rents and abnormal land prices resulting from the concentration of business in downtown Tokyo.
One approach has been to construct high quality office buildings throughout the 23 wards of Tokyo, instead of concentrating such buildings in the central business district. An example of this is the move of the Tokyo Metropolitan Government offices into a newly-built complex in Shinjuku. It is also supporting the creation of several other subcentres for office allocations.
Further Decentralization Needed
The Ministry of Construction now provides "urban planning" guidance for office and commercial facilities constructed within the 23 wards of Tokyo. Under their regulations, an increase in office capacity is granted those who construct free and open spaces for public use, or who specifically create a traffic route within the building site that is designed to link in with existing public transportation facilities. But even these efforts to decentralize within the 23 wards must recognize that any attempt to satisfy real estate demands in the greater Tokyo area will ultimately lead to increased public transportation and energy demand, as well as heavier automobile traffic. What is necessary is an even broader dispersion of business functions to all of the 23 ward areas, including the waterfront. Unfortunately, in my view, this approach is strongly opposed by the national government.
The Tokyo Commuter
The extremely long commuting time of office workers in Tokyo has forced them to accept physical and mental hardships in their daily lives. As the housing area for Tokyo has expanded to an extremely wide region, the central government itself has come to acknowledge the deadlock in overcoming the critical problems of modern urban Tokyo: traffic congestion, urban pollution, skyrocketing land prices, the panic that might result if a large earthquake struck.
Such realities and possibilities have led the government to accept a new viewpoint on Tokyo's vastly spread disorder of residential areas - and to put a new focus on "living." The National Land Agency, for example, has designated certain large cities within 30 to 50 kilometres of Tokyo as so-called "business core cities." The long-term aim is to reform them into relatively independent cities with their own economic functions, without total reliance on Tokyo. Such moves should promote the national policy of nurturing satellite cities and contribute to the dispersion of activities and the creation of new housing.