Old Property Renovation Case Study | A Record of Challenges and Dialogue in Achieving Full Occupancy

At INA&Associates Inc., there is a deeply rooted culture that values challenges and encourages action without fear of failure. A symbolic episode of this culture is the renovation project of a property that had deteriorated in value due to its age. As rental housing over 30 years old continues to increase across Japan, how to utilize aging properties is a challenge for the entire real estate industry. Rebuilding requires significant cost and time, and if left unattended, vacancy rates rise and property values decline—against this backdrop, INA deliberately chose the difficult path of "regenerating the value of old properties."

This building in Aoba Ward, Yokohama City, Kanagawa Prefecture (completed in 1987) was previously used as a rental apartment and student dormitory. Over 30 years after completion, both the exterior and interior had deteriorated with age, and the facilities had become outdated. Rent had been declining over the years, and for the owner, it had become a property with troubling utilization challenges. For an old property that everyone felt would be difficult to regenerate, INA embarked on a bold renovation plan.

Making the Decision for Large-Scale Renovation Without Fear of Failure

To maximize property value, the INA team began planning that wasn't constrained by conventional thinking. In typical renovations of old properties, many cases are limited to restoration or surface-level refurbishment (such as replacing wallpaper and exchanging equipment). However, this alone cannot differentiate from surrounding new or recently built properties, making it difficult to maintain or increase rent. The INA team determined that half-hearted repairs would simply be lost in the market and, without fear of failure, proposed bold investment and comprehensive renovation to the owner, who made the decision to proceed.

From 2020 onward, the rapid spread of COVID-19 triggered the swift adoption of telework. Living spaces were required to function as "places to work," and more people began prioritizing the spaciousness and comfort of living spaces over commuting convenience, creating a trend of moving from urban centers to suburbs. The INA team quickly recognized this social change and implemented large-scale renovation across all units and common areas. They developed a plan to transform the property into a home that would meet the rapidly growing telework demand of the time.

Particularly noteworthy is that each unit adopted different floor plans and designs. In typical rental renovations, unified specifications for all units are common, considering construction costs and ease of management. However, INA took on the high-risk challenge of deliberately giving each unit its own character to provide diverse options that align with each resident's lifestyle. Some units were equipped with custom-built desk spaces dedicated to remote work, while others featured spacious, open living rooms, creating designs that could accommodate diverse ways of living.

At the same time, they spared no expense in equipment investments for security and convenience required in modern living, such as installing auto-lock systems and parcel delivery boxes in common areas. The installation of parcel delivery boxes provided practical value to teleworkers, as they wouldn't need to interrupt their work to receive packages while working from home. Such bold proposals were possible because the entire team shared an aspiration to "create value exceeding the current state" and a positive attitude to learn from setbacks and apply those lessons to the next challenge, even if plans didn't proceed as expected.

Of course, the journey was not smooth. When renovating old properties, there are always challenges that cannot be fully understood from blueprints alone, such as deteriorated piping and structural constraints that only become apparent when walls are demolished. This project also faced unexpected problems during construction that forced replanning. However, the team supported by INA's culture did not become discouraged; instead, members actively exchanged opinions each time they faced a problem. Through internal dialogue where experts from various fields—design, construction management, property management, and more—gathered to contribute their wisdom, they resolved difficult challenges one by one. This process itself embodies our culture.

Challenge to Exceed Market Rent — Leasing Struggles and Innovations

After renovation, the property was transformed into an attractive telework-ready property with bright solid wood flooring (in some units), newly installed system kitchens and bathrooms with reheating functions, and high-speed internet (NURO Hikari) in all units. With different design concepts for each unit, visitors were amazed, saying "I can't believe this is the same building."

However, the real challenge started here. To monetize the property, we needed to attract tenants at rents that matched this added value. After thorough market research and analysis of rent levels for properties with similar age, size, and facilities in the surrounding area, we proposed bold rent pricing that exceeded market rates in this area. Despite being an old property, we decided to reflect the added value from renovation in the rent. Bold pricing comes with risks. If rent is higher than the surrounding market, there was a possibility that prospective tenants would not come forward.

Initially, shortly after we started recruiting, some customers who came to view the property honestly told us, "Isn't this expensive for an old property that's a bit far from the station?" It's natural to feel it's overpriced considering only the age. So we fearlessly revised our strategy. To properly convey the value matching the rent, the team fundamentally reconsidered our promotion methods.

Specifically, we planned and held open house events to allow people to experience the property's appeal firsthand. We also incorporated staging like a model room, arranging desks and chairs in workspaces so people could envision actually working there. Furthermore, for those hesitant about in-person viewings during the COVID-19 pandemic, we also conducted online virtual viewing tours. Using videos and 360-degree panoramic images, we devised ways for people to grasp the property's atmosphere even from afar. In these initiatives, we promoted not just that the facilities were new, but prominently featured the concept of "a home where you can achieve an optimal telework lifestyle," appealing to the essential value of the property.

Additionally, we carefully attended to each person who inquired, listening to their remote work concerns and ideal home vision, then communicating through dialogue that "this property can make that happen." Rather than uniform sales talk, we made proposals tailored to each person's lifestyle.

Success Born from "Person-to-Person Dialogue"

The greatest key in leasing activities was person-to-person dialogue. Rather than simply negotiating terms, we directly engaged with prospective residents and real estate brokerage companies, listening to their needs and concerns. We also carefully explained the property's features and target demographic to brokerage companies, sharing the background of "why this rent level," building relationships where they could introduce the property to customers with confidence.

For example, a couple primarily working from home initially hesitated about the high rent. However, through direct dialogue with our staff, they developed deeper empathy for the quality of life and comfort this home could provide. "Thanks to the custom-built desk for remote work, I can concentrate on work, and during off-time, I can refresh on the balcony with a nice view"—we spoke with passion so they could envision such a concrete future life. As a result, the couple was convinced that "even if the rent is somewhat high, there's value in living here" and decided to move in.

Through such steady efforts of repeated dialogue, we gradually gained a reputation and received many inquiries. Word-of-mouth and referrals from residents also emerged, and the property's recognition steadily expanded. Shortly after the property's completion, multiple lease contracts were established, and we approached full occupancy at a speed exceeding the owner's expectations.

Ultimately, despite rent settings exceeding market rates, we achieved full occupancy and successfully achieved dramatic improvement in property value. The transformation of an old property into an attractive home chosen by residents meant not just recovery of asset value for the owner, but the establishment of a long-term revenue foundation. Needless to say, behind this success was INA's corporate culture centered on "people," not just numerical ingenuity.

Growth Born from a Culture That Values Challenge and Dialogue

This regeneration project is a symbolic story that embodies INA's culture code. Because we had a spirit unafraid of challenges, we could venture into the difficulties of bold renovation and high rent settings. Because we had positive attitudes that turn failure into learning, we could flexibly respond to mid-project course corrections and leasing strategy revisions. And above all, because we had an attitude of valuing dialogue with people, we built trust with residents and stakeholders and guided the project to success.

At a time when vacancy problems are becoming serious due to the increase in old properties and population decline, we directly tackle property regeneration and create new value—this project is one example demonstrating that determination.

This corporate culture is a great attraction and source of reassurance for both colleagues working together and clients who entrust us with work. Because an environment is in place where each employee can enjoy challenges with aspiration and try new ideas without fear of failure, we can provide services that constantly evolve. Also, by valuing dialogue with clients and partners, we derive essential solutions based on mutual understanding.

Finally, if we express INA's culture in words through this case study once again, it would be as follows:

• Value challenges and act without fear of failure: Have the courage to constantly venture into new challenges without being satisfied with the status quo, and even if we fail, convert it into learning and move forward.
• Maintain aspiration and positive attitude: Both individuals and teams always aim for growth, and even when facing difficulties, view them positively and generate solutions.
• Value person-to-person dialogue: Listen to others' voices both internally and externally, build trust through dialogue, and co-create value together.

This culture code is the driving force of INA&Associates Inc. We will continue to embrace this culture and pursue further challenges. And to remain an entity where people think "I want to entrust my future to this company" and "I can confidently leave work to this team"—we will continue creating new value in the real estate industry while cherishing person-to-person connections.