Ad agency Dentsu considers sale of Tokyo headquarters in $3b megadeal

Dentsu's headquarters in Tokyo's Minato Ward: The majority of workers there no longer come into the office amid the coronavirus outbreak. (Photo by Shinya Sawai)

Advertising agency Dentsu Group will consider selling its headquarters in central Tokyo in a deal possibly worth around 300 billion yen ($2.9 billion), which would mark one of the largest property sales ever in Japan.

The group joins a string of Japanese companies that are reevaluating what to do with their Tokyo headquarters, as the coronavirus outbreak forces them to embrace a new approach to the workplace. Dentsu in particular is looking to shift to a more decentralized corporate structure that relies heavily on teleworking.

Completed in 2002 in the waterfront district of Shiodome, Dentsu Group’s headquarters stands roughly 210 meters tall with 48 floors above ground. The lower levels house a commercial complex called Caretta Shiodome.

Dentsu could extend preferential negotiation rights to a potential buyer and enter full-fledged negotiations as early as this month. Proceeds from the sale will go toward structural reforms and investments in future growth.

The biggest property deal in Japanese history was BlackStone’s 2020 purchase of about 220 condominium buildings for 300 billion yen, according to U.S. real estate services company Jones Lang LaSalle. The Dentsu sale could rival this in scale.

The group has accelerated its push for more diverse workstyles since the coronavirus spread across Japan last February. No more than 20% or so of employees at its headquarters still come into the office, with over 9,000 working remotely instead.

The agency is looking to streamline its excess office capacity, with plans to lease most of the building from the buyer so it can keep its headquarters there.

Potential buyers include financial institutions, property developers and investment funds. In addition to a steady stream of rental income from Dentsu, the building is located in an extremely popular area of Tokyo and could attract new tenants as well.

Other Japanese companies are also selling off property. Record label Avex, whose earnings have suffered due to event cancellations and other pandemic-related issues, announced at the end of 2020 that it will sell its Tokyo headquarters. Canadian property investment company BentallGreenOak has reportedly agreed to buy the building for about 72 billion yen.

Institutional investors like BentallGreenOak have purchased many of these properties that are for sale. Low interest rates are only expected to boost their interest in real estate, which has relatively high returns.

The article was first published on Nikkei Asia

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.