Out of the city

Suburban street in Sakae

We’ve written in the past about how local governments come up with schemes to repopulate their areas, often by dangling cash incentives in front of families or couples who plan to have children. The coronavirus crisis has reinvigorated these efforts since more people are now working from home. Prior to the mid-90s, the pattern of home ownership was that breadwinners who worked in large cities but wanted their own home would buy one in the suburbs and commute, because they often couldn’t afford city prices. There was also the idea that it was better to raise a family in the suburbs. And because employers paid for transportation, they put up with ever more punishing commutes. However, some years after the bubble burst and the so-called ice age of stalled employment possibilities set in, younger people with no real certainty of promotion within their companies and less likelihood of settling down decided that they would live near their place of work, regardless of what it cost, because they didn’t want to spend two hours-plus on the train every day. Maybe their fathers did that and they decided, no way am I going to do that. So they live in cramped, expensive rental apartments in the heart of the city, even if they didn’t like the city.

So the increased ingress of young people to places like Tokyo is not entirely due to decisions based on desire. But now, if your employer says you can work from home there’s no reason to live “near the office,” and, according to news reports, more people are leaving the city because they don’t like living there. Some local governments are already trying to exploit that trend. Sakae, a town in northern Chiba Prefecture just west of Narita, is now offering families ¥50,000 if they move to their area. The catch is that the family has to prove that one or more of the members is teleworking, a condition we find a bit puzzling—if the purpose of the money is to lure families, then why limit it to only teleworking people? Also, a one time payment of ¥50,000 doesn’t sound like much of a mind-changer, especially since the family has to pledge they will remain in Sakae for at least three years.

The thinking, we assume, is that there a families now contemplating such a move but have not hit on a definite place to relocate, so ¥50,000 is simply a way to nudge that decision in Sakae’s favor. Also, any couple who has a child after April 28, 2020, will also receive a one-time payment of ¥100,000, so there’s another incentive for people who are serious about building families in Sakae. It should be noted that the family does not have to buy property, though, apparently, Sakae is plagued with a lot of vacant houses. Even renters are eligible for the payments. However, Sakae makes a point of telling potential residents that there are many empty houses in good condition attached to large parcels of land that can be bought for under ¥10 million. (We can attest to this because Sakae is not far from where we live, and it’s quite an attractive town in that it isn’t as overrun with ticky-tacky housing developments, like other towns in Chiba) Even if you want or need to go to Tokyo, it’s only an hour by train, and Narita Airport is 15 minutes away.

But it’s not just young people who want to move out of Tokyo for the sake of their own peace of mind or their bank accounts. A recent article in the Nihon Keizai Shimbun told of an entrepreneur who is moving back to his hometown of Niigata because he no longer has to live in Tokyo for the sake of his startup IT company. Thanks to COVID-19 he discovered he and his 100 employees can work from home. At first, the changeover was inconvenient, he says, but once he figured out how to set up remote conferences and meet clients over the internet, he found it was more efficient in terms of his use of time, and now he says he’ll never go back to his former business ways. More importantly, he misses Niigata and the opportunity to move back is too good to pass up. Since moving back he says he is now more “motivated” and has become involved in the community, something that he didn’t do in Tokyo, where he always felt like an outsider.

In order for this kind of thing to work, online functionality is important, and another positive by-product of the pandemic is that the digitization (usually referred to as DX) of Japan, which, according to Nikkei, lagged behind the rest of the developed world, has accelerated in recent months by necessity. In Japan, the “new normal” mainly means a greater reliance on digital technologies for both work and everyday matters. Nikkei describes a new medical consulting app called Lever, which allows users to consult with real physicians 24 hours a day, 365 days a year via their cell phones, from anywhere in Japan. Such a technology could be massively important for depopulated areas where medical services are desperately lacking.

Of course, some people are not so happy with these developments. One real estate web site reports that the vacancy rate for rental office space in the five central wards of Tokyo increased by 0.33 points to 1.97 percent from May to June. That’s four months in a row that the vacancy rate has gone up. The bad news is worse for certain areas—the vacancy rate for Shinjuku Ward stood at 3.38 percent in June. Also, rents are going down. Shibuya Ward has the highest commercial rents in Tokyo. In April, the average was ¥25,531 per tsubo (3.3 square meters). In June it was ¥25,075, which is a problem because Shibuya is currently going through a massive commercial construction phase. Of course, if rents go down enough Shibuya may become more attractive to some businesses, but the whole point of the telework trend is that offices are not only expensive to maintain, they’re inconvenient for many workers. The entrepreneuer interviewed by Nikkei said that one of the significant realizations he had once he started teleworking is that most meetings are not necessary. He felt liberated. Imagine how his employees feel.

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