TSUBO (Unique unit basis for area measurement)
1 tsubo equals to about 3.3 square meters, and the rental rate for office space is usually expressed in a per tsubo basis in Japan. Adapting to the tsubo measure may enable you to understand the Lessors' leasing logic better, since profitability is usually calculated on tsubo measure. 1 tsubo equals twice the size of 1 traditional tatami mat.
Deposit (Shikikin)
Refundable payment to Lessor to conclude a lease contract. Remains after the deduction of 'Restoration Fee', 'Fixed Amortization Fee' (if applicable) and a general cleaning fee, will be repaid to Lessee, usually within 3 weeks to 1 month after vacation. Market Average: 6-8 times monthly rent (for small-to- mid-size office)/ 10-15 times monthly rent (mid-size office or larger). Lessor can legally affix the amount of the security deposit to any amount deemed appropriate; so you may be offered a fixed amount rather than 'multiples of a rent'. In most cases, usually required as multiples the rent. If your lease condition includes the management fee, it is recommendable to ensure whether the management fee value is calculated in a deposit sum. The inclusion of the management fee usually causes 30 percent higher sum than nominal rent basis only.
Key Money (Reikin)
Non-refundable payment to lessor when concluding a lease contract. Reikin, usually expressed as 'key money' in the local practice, is a condition frequently questioned as most incomprehensible by non-Japanese, new to Japan. It is said to have begun around post World War II period when the society had serious lack of leasing space in cities, and thus people became paying lessors an extra fee to express gratitude for accepting the lease. Reflecting recent economic depression, the key money is being excluded from lease conditions for expensive properties. On the other hand, the condition for properties expecting Japanese tenants is deep-seated and hardly negotiable in most cases. In a case to negotiate the waiving the key money of an individually owned property, please assume in advance that the condition can be uncompromisingly insisted. Due to lack of the recognition, many non-Japanese experienced difficult negotiations or denials by individual owners. If there has been no sign of concession after negotiating with lessors twice, please consider it unlikely deletable.
Renewal fee
Non-refundable payment to Lessor as to renew the lease term.
Fixed Amortization Fee
Non-refundable payment to lessor, usually deducted from security deposit when vacating an office. Recent economic depression and law revision affect Lessors to consider adopting actual cost basis rather than fixed. It should also be noted that most leases with a binding amortization payment still seek lessees a restoration liability.Market Rate: 1-2 times of a rent.
Fixed Amortization Fee
Non-refundable payment to lessor, usually deducted from security deposit when vacating an office. Recent economic depression and law revision affect Lessors to consider adopting actual cost basis rather than fixed. It should also be noted that most leases with a binding amortization payment still seek lessees a restoration liability.Market Rate: 1-2 times of a rent.
Rent Free Term
A period that Lessor agrees to lease Lessee an office space free of rent. In a case that a rent consists of a combination of nominal rent and management fee, a standard definition of 'rent free term' excludes the nominal rent part only, and the Lessee is still liable for the management fee throughout the term. Since many non-Japanese confuse the various definitions, please consider 'discounted rent term' for actual implication.
No management fee and the inclusion of management fee within nominal rent are two different definitions. In most cases of the inclusion, payment of amount equivalent to management fee value throughout the rent-free term will be insisted. Since not included in most initial offers, you might need to negotiate whether such condition is acceptable. Most Lessors agree to accept the free term by trading to retain a certain level of rent. For mid-sized or larger office buildings, successful negotiation can result in a 2-6 month free rent term.
Rent
Usually expressed in both tsubo (3.3 sq.m.) and sq.m. bases. Please ensure whether the nominal rent includes the management fee within.
Management Fee
Usually insisted for covering monthly expenses of utility and cleaning charges for public spaces and elevators.
Unlike the nominal rent, most management fees are hardly negotiable to decrease or delete.
Sales Tax
Excepting organization such as embassies, consulate offices or other public or military service offices of foreign countries, other general office lessees need to pay sales tax on rent, management fee, fixed amortization fee, key money and renewal fee. The current tax rate is 5%.
