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TOKYO-One of central Tokyo's largest new developments has almost fully filled its office space be...
TOKYO-One of central Tokyo's largest new developments has almost fully filled its office space before opening its doors next week, underscoring strength in the city's property market.
Mori Building Co., a major Japanese developer known for projects such as Roppongi Hills and the Shanghai World Financial Center, said Wednesday it has completed the multiuse development, called Toranomon Hills. Mori Building said it has invested 140 billion yen ($1.36 billion) in the project.
Tokyo's property market has revived recently, supported by Prime Minister Shinzo Abe's economic programs. Demand for office space is rising as companies expand, and the amount of space available for rent has fallen sharply in recent months, bringing rents up. Relatively few new buildings are coming on the market, helping tighten conditions.
Toranomon Hills, located a few minutes' walk from the U.S. Embassy and just south of the central government district, also houses retail shops, luxury private residences, conference space and a 164-room hotel carrying the Andaz brand name of Hyatt Hotels Corp. H +0.19% The complex stands on a recently completed highway extension that will eventually connect it to Tokyo Bay where many Olympic events are planned in 2020.
"This is the area that attracts people, goods, money and information from around the world. We want to revitalize the city quickly," said Mori Building Chief Executive Shingo Tsuji. Mori Building said the office space at the complex was nearly filled but didn't give a specific occupancy rate.
Along with partners, Mori Building is planning to develop 10 high-rise projects worth about ¥1 trillion, or about $10 billion, in the neighboring area in the next decade, Mr. Tsuji said.
Some analysts are still cautious about the longer-term outlook for the Tokyo real-estate market because of Japan's declining population and recent history of sluggish growth. For the market to continue growing, Tokyo needs to lure more companies from abroad, they say.
"Attracting new tenants is a must," said Shigeo Hirayama, head of research at Urban Research Institute Corp., a Japanese real-estate research and consulting firm.
Tokyo land prices rose last year after two decades of almost constant falls. In the first quarter of 2014, total commercial-property transactions in Tokyo rose to $10.1 billion, leaping above the levels for New York and London.
The Los Angeles-based real estate services firm CBRE forecasts effective rents for high-quality buildings in central Tokyo known as Grade A will rise 29% in the next three years.
About 20 tenants are set to fill the roughly 100,000 square meters of office space at Toranomon Hills. They include the Japan unit of Swiss-based pharmaceutical company Novartis AG NOVN.VX +0.37% , Japanese advertising agency Asatsu-DKInc. 9747.TO +1.73% and other technology, law and manufacturing firms.
Many in the real-estate industry have called for a reduction of Japan's corporate tax rate, currently about 35%--higher than most European and Asian countries. Japan's ruling party this week cleared the way for a corporate tax cut to take effect next year.
Hiroshi Okubo, head of research for Japan at CBRE, said a higher tax rate has been an obstacle for foreign firms to establish Asia headquarters in Tokyo.
Write to Kosaku Narioka at email@example.com