Trends in teleworking in Tokyo

Teleworking is not yet widespread among companies and employees in Tokyo, despite significant changes brought by COVID-19.

June 08, 2021

The Japanese government announced a state of emergency in April, covering four prefectures, including Tokyo, due to the spread of new strain of COVID-19. The unpredictable and uncertain situation has had a noticeable impact on the Tokyo office market.

The vacancy rate in Tokyo’s Grade A office market stood at 1.9% in April, the highest level since August 2018. Companies continue to optimise space and adjust office sizes, influenced by expanded teleworking and cost savings, which could continue to drive vacancy rates higher in the near-term. Rents in the Grade A office market in Tokyo averaged JPY 38,164 per tsubo per month at the end of April, the 13th consecutive month of rental decline since April 2020.

Under these circumstances, what are the trends in teleworking among companies and employees? The Tokyo Metropolitan Government released a survey on the teleworking implementation rate of companies with 30 or more employees in Tokyo. According to the survey, about 43% of companies did not introduce teleworking in the first half of January 2021. About 71% of employees came to the office five days a week during the state of emergency.

Figure 1: Rate of teleworking implementation by companies and employees in Tokyo

Source: Tokyo Metropolitan Government

Companies shrinking in size are less inclined to implement teleworking compared to those with increasing business. But there has not been any significant change since April 2020. The percentage of small and medium-sized companies that answered in the survey having "No plans to implement teleworking in the future" was almost unchanged from a year ago. It appears teleworking is only being implemented by a few large companies. Employees at many small and medium-sized companies are forced to come to the office, signifying that teleworking is not yet widespread.

On the other hand, the number of employees who do not use the office frequently has remained steady, suggesting that this work style has generally taken root. The percentage of full-time teleworkers (zero days in the office) and partial teleworkers (one or two days a week in the office) has remained at 15-20%. There was no significant change in April after the emergency declaration was lifted, suggesting that they were unaffected by the state of emergency. Even when the pandemic ends, a certain percentage of employees will not likely return to the office five days a week. These employees will continue to telework because they like the new work style and choose to adopt it.

The corporate office strategies for the new normal are becoming more important from the perspective of a sustainable increase in values and securing talent. In the Tokyo office market, full-fledged initiatives are underway to encourage not only the COVID-19 prevention measures but also the diverse and flexible working styles in the true sense of the word.