Why Did JT and Dentsu Let Go of Their Own Buildings? Weighing "Own or Sell" Amid Soaring Construction Costs and New Lease Accounting Standards

The first factor Murayama raises is aging buildings. Headquarters buildings constructed at the end of the Showa era and the beginning of the Heisei era are now reaching their late thirties. The average age of office buildings in Tokyo's 23 wards is 35.3 years, and at that age the replacement schedules for major systems such as air conditioning, elevators, rooftop waterproofing and electrical equipment all start to overlap. Murayama describes this as a chain reaction in which "you fix one thing and the next one comes along."

The cost of that work has also risen sharply. According to government statistics, with construction costs in fiscal 2020 set at 100, the index stood at 121.9 in fiscal 2025 and 125.0 in April 2026. Murayama sums this up as the same work costing more than 20% more than it did five years ago. Materials and labor costs are both rising, and in the case of a company-owned building, work cannot halt operations during construction, so it has to be done at night, making it even more expensive.

What Murayama emphasizes here is that repairs are an expense to preserve a building's value, not something that generates new profit. The growing weight of this "defensive spending" is the fundamental premise of the discussion.

From here, Murayama shares their own analysis. In the past, owning your own building was itself a mark of a top-tier company, and there was a sense that it was a stable asset. Today, however, Murayama sees the cost of continuing to own as actually quite heavy; it is simply hard to see.

One example Murayama gives is the entrenchment of hybrid work. Many companies have unused corners of their offices, with meeting rooms that have become little more than storage. If you rent, a rent bill arrives, but with your own building it does not, so people are less aware of the money tied up in empty space. In reality, the company keeps paying property taxes, maintenance contracts, cleaning fees and electricity for floors no one uses. Murayama explains that, compared to a home, this is like continuing to pay fixed costs even for rooms that are barely used, and the only reason no one notices is that no bill arrives.

So the first step is to make this invisible cost visible as "how much per unit (per section)." Only then can it be compared with renting on equal terms, and that, Murayama says, is the starting point for the evaluation.

After all this, it might seem that "selling is the better deal," but Murayama says it is not that simple and raises three points that shape the decision.

Until now, a "leaseback," in which a company sells a building and then rents it back, could take the asset off the books and make the company look leaner. Under the new lease accounting standard (applicable to fiscal years beginning on or after April 1, 2027), however, leased real estate must also be recorded on the books, so that "slimming-down effect" becomes smaller. Murayama explains that the equation "sell and your finances get cleaner" starts to break down somewhat.

Murayama characterizes this point as "unglamorous but important." Equipment can be replaced, but there are limits to how much renovation can change a building's skeleton, such as the insulation performance of walls and windows or ceiling heights. Going forward, large companies will be required to disclose environmental data that includes their business partners, and older buildings may be at a disadvantage. Murayama sees this as where the real risk of continuing to own lies.

What Murayama calls "the most human" issue is attachment. Murayama believes feelings for the place where a company was founded cannot be separated from management decisions, and that there is no need to separate them. But deciding on feelings alone pushes the examination of numbers to the back burner. And postponing has a cost too. Since construction costs keep rising, the longer a company waits to start, the heavier the burden becomes. If it ends up scrambling to respond after equipment breaks down, there won't even be time to compare options.

So what should companies do in the end? Murayama's answer is not to think of it as a binary choice between "sell or keep." Taking into account factors such as working styles and the environment, a company should get a renovation estimate and a sale appraisal at the same time and lay them out side by side on the same table. Only then, Murayama says, can a decision be made that also accounts for attachment. Accordingly, Murayama states, it is not a question of which option is the right answer.

Murayama also adds that this is not just an issue for large companies. Whether a company falls under the accounting rules varies greatly depending on its size, but rising construction costs and rising rents weigh just as heavily on small and medium-sized businesses. So rather than thinking "this doesn't concern us," it may be a good time to take stock of the real estate you currently hold, in Murayama's view.

Finally, Murayama says that letting go of the place where a company was founded is surely a decision that takes courage, but companies that can move boldly in step with change are strong after all, and closes with the sentiment of wanting to support companies capable of such bold management decisions. Murayama asks viewers whether, when it comes to their own company or family home, they are on the side of "holding on" or "traveling light."