Japan Buildings Seeing Increased Refurbishment Instead of Rebuilding; Cost of New Land, Construction Seen as Factors

By Rui Suzuki / Yomiuri Shimbun Staff Writer

15:08 JST, June 26, 2025

A growing number of businesses are choosing to renovate aging office buildings and commercial facilities to avoid hurdles in rebuilding or constructing new facilities.

The trend has increased due to a shortage of locations, longer construction periods and the soaring costs involved in rebuilding or establishing new facilities.

Businesses are turning to renovations to alleviate these concerns while being able to change the use of the buildings and improve their functionality.

Resources

Major real estate company Mitsui Fudosan Co. acquired and renovated the building that housed the former Sogo Kawaguchi department store in Kawaguchi, Saitama Prefecture. The building, located in front of JR Kawaguchi Station, closed in February 2021 and later reopened as LaLa terrace Kawaguchi, a new commercial facility, on May 31.

The renovation work, which mainly focused on the interior, took about 10 months. The marionette clock and marble pillars at the entrance, which have been familiar to residents, were retained. If the company chose to rebuild the facility completely, it would have taken three to four years to complete.

“Old buildings themselves are resources. If we can make good use of them, they would create an atmosphere that cannot be achieved with new buildings,” said a Mitsui Fudosan official.

In many cases, renovations are carried out to change a building’s purpose and to improve its functionality.

In November, major general contractor Obayashi Corp., a major general began a project to renovate medium-sized buildings in urban areas and use them as data centers. The company aims to address the lack of suitable sites for these facilities amid rising demand due to an increase in the volume of data processing.

The company is also considering connecting data centers with dedicated lines and using them as a single large-scale center.

Major design firm Nikken Sekkei Ltd., in cooperation with the Development Bank of Japan, has launched an initiative to improve the environmental performance of old facilities by upgrading thermal insulation and reviewing air conditioning systems when renewal work is taking place. For their first project, the firm renovated an about 60-year-old office building in Osaka City.

“There are many medium-sized old buildings across the country,” said a Nikken Sekkei official. “If we can present a model case, we can expect to receive more orders to renovate such buildings.”

Avoiding reconstruction

The choice of either reconstruction or renovation is often based on factors such as costs and how long construction would take.

In addition to the rising personnel and material costs, construction periods tend to be longer as an increasing number of firms draw up construction schedules to ensure their workers are provided with enough holidays. These hurdles often affect decisions to rebuild.

“It’s difficult to undertake multiple large-scale reconstructions at the same time,” said an executive of a general contractor. The situation has resulted in multiple redevelopment projects being cancelled or postponed.

In addition, rebuilding can be avoided because many existing buildings meet the new earthquake resistance standards that were introduced in 1981. According to government statistics, the total floor area of non-residential under construction peaked in 1990, reaching 146 million square meters. Many existing buildings that are being considered for reconstruction were built after the new standards were introduced.

“While the service life of buildings is getting longer, the cost of reconstruction is soaring,” said Naoko Kurosawa of Mitsubishi UFJ Trust and Banking Corp. “Businesses began taking countermeasures, such as changing how a building is used, so their values may not see a drop in the investment market even as they age.”