When starting a business in Japan, the choice of office setup can bring significant benefits, such as gaining social credibility and enhancing productivity. However, since there are various types of office spaces available in Japan, many foreigners may find it challenging to decide which option is best for their needs. This article aims to introduce the characteristics of the different office types available for rent in Japan, along with their respective advantages and disadvantages, to help guide your decision when choosing an office for your startup.

Types of Offices

In Japan, office spaces available for rent can be broadly categorized into five types. Below, we will explain these office types, their features, and their differences.

Rental Offices

Rental offices, also referred to as leased office spaces, are conventional real estate properties rented for office use. If approved by the owner, you can freely customize the furniture layout and facilities to suit your business needs.

The budget varies depending on the location and size, with monthly rents typically ranging from ¥100,000 to ¥500,000. In urban centers, the costs can be significantly higher.

The advantages of rental offices include the ability to freely customize the layout and facilities, allowing you to create an environment best suited to your business. Lease terms vary depending on the property, but long-term contracts, such as two-year renewable agreements, are common and provide a stable office environment. Furthermore, customizable interiors can enhance your company’s branding, improve employee motivation, and leave a strong impression on clients. Since rental offices provide dedicated spaces, unlike shared offices, you don’t have to share areas beyond client reception spaces with other individuals or companies, ensuring a focused working environment.

On the other hand, rental offices come with high initial costs, such as deposits, key money, and agent fees. Particularly, the deposit for office leases is often higher than that for residential leases, typically set at six months’ rent and sometimes reaching up to 12 months’ rent. Additionally, maintenance fees, shared facility charges, and utility costs may incur, leading to high running costs. Another drawback is that the lease procedure can take time, delaying the start of operations in your new office.

Serviced Offices

Serviced offices are a type of office setup that provides private, dedicated spaces. They offer more than just office space, including a wide range of support services, high-quality office furniture, and various facilities, making them a high-value-added option. A distinctive feature of serviced offices is the inclusion of receptionists, secretarial services, and other comprehensive business support.

The cost is generally between ¥30,000 and ¥50,000 per person per month, with variations depending on the location, accessibility, and services offered.

The benefits of serviced offices include not only savings on office space and equipment costs but also reductions in personnel expenses for reception and secretarial tasks. For instance, many serviced offices provide concierge services and call-handling services, enabling you to delegate visitor reception and phone operations to specialized staff. This eliminates the need to hire and train such personnel within your company. Furthermore, their fully equipped facilities allow for quick setup, so your business can start operating immediately.

However, serviced offices can be more expensive in the long term compared to traditional rental offices. Additionally, optional services such as meeting rooms or call handling often come with additional fees, so it is essential to confirm the total cost, including these extras, before signing a contract. Lastly, as shared spaces such as lounges are used by multiple companies, you should take precautions to prevent information leaks when using them.

Shared Office

A shared office is a type of workspace where multiple businesses or individuals share a single space. Typically, it operates on a hot-desking system without designated private rooms, allowing users to utilize shared workspaces, meeting rooms, and other facilities. Shared offices are particularly suitable for startups, freelancers, and small-scale businesses due to their cost-effectiveness and ability to enhance operational efficiency.

The cost of using a shared office generally ranges from ¥10,000 to ¥30,000 per person per month, depending on the location and available amenities.

One major advantage of shared offices is the absence of substantial upfront costs such as security deposits or key money typically required for traditional rental agreements. Instead, there may be membership or annual fees, but utilities and internet costs are often included in the monthly usage fees, reducing the overall running costs.

However, shared offices also have drawbacks. Popular shared offices can become crowded, making it difficult to secure a quiet working environment. Additionally, since the space is shared with others, careful attention is required to manage confidential information and prevent data leaks.

Coworking Space

Coworking spaces are open environments where individuals from various industries and professions gather to work. While similar to shared offices, coworking spaces emphasize interaction and community-building among users.

Unlike traditional rental offices, coworking spaces charge usage fees rather than rent. These fees are relatively affordable, ranging from ¥5,000 to ¥30,000 per month. Additionally, coworking spaces often allow short-term usage, such as hourly rentals, making them convenient for those who need a workspace for just a few hours to handle urgent tasks.

The benefits of coworking spaces include low costs since users pay for usage rather than rent. Moreover, coworking spaces often attract individuals who value networking, providing opportunities for information exchange and collaboration with other users.

On the downside, coworking spaces, being open environments, make it challenging to ensure privacy. Users must take precautions against data leaks and manage confidential information carefully. Furthermore, the lack of designated private spaces makes them unsuitable for individuals seeking a stable and dedicated work environment. When opting for a monthly plan, additional costs such as security deposits, membership fees, or optional service fees may apply, so it’s essential to carefully review terms before making a decision.

Virtual Office

A virtual office is a service that provides a business address for registration purposes but does not offer actual office functionality. Whether for sole proprietors or corporations, having a registered address is essential in Japan for company registration, opening bank accounts, and receiving mail. A business address is also necessary for business cards, websites, and disclosure to clients.

With a virtual office, users can secure an address without needing a physical workspace, thereby avoiding certain risks.

The cost of a virtual office is significantly lower, typically around ¥4,000 to ¥5,000 per month, even in urban areas like Tokyo.

The primary advantage of a virtual office is the ability to register a company at a prestigious address, such as in central business districts, enhancing credibility. It is a cost-effective solution since it doesn’t require leasing a physical property. However, the lack of an actual workspace is a key disadvantage.

For example, if you wish to use your home as an office, registration is possible if you own the property. However, in most rental agreements for residential properties, business registration is not permitted. For those in such situations, combining home office use with a virtual office might be a viable solution.

Conclusion

This article has explored various office types and their differences. When renting an office in Japan, it is crucial to consider the unique characteristics, budgets, advantages, and disadvantages of each option to select the best fit for your business needs. Use this guide as a reference when choosing your office in Japan.