CBRE today released market data for large multi-tenant logistics facilities in Greater Tokyo and the Greater Osaka for the fourth quarter of 2011, excerpted from the "Japan Industrial Market View-- Q4 2011," scheduled for publication on January 31.
Noteworthy Trends
- As the trend toward improved vacancy rates continues, major declines in the rate were seen in Greater Tokyo and Greater Osaka, to 5.2% and 2.9%, respectively.
- With such high occupancy rates, the supply shortage at large prime properties has intensified, as has an appetite for investment in logistics facilities development.
Vacancy rates in Greater Tokyo for the quarter ending Ｑ4 2011 fell 0.4 points from the preceding quarter to 5.2%. This quarter saw a continuation from the previous quarter of underlying solidity in demand for large newly constructed properties in the second consecutive quarter of improvement. New demand this quarter was accounted for in part by relocations to prime buildings by firms handling general consumer goods for the purposes of consolidation and elimination, as well as establishing new bases. Amid these circumstances, virtually all of the large buildings completed during 2011 were fully occupied. With occupancy at such high levels, there were multiple inquiries for limited available rental spaces, resulting in an ever stronger trend toward shortage of supply at prime properties.
As was the case last quarter, there was no new supply in Greater Osaka this quarter. Relatively longstanding vacancies in large properties continued to be filled as the vacancy rate significantly declined by 2.9 points from the previous quarter to an all-time low of 2.9%. Also, with the first large supply of multi-tenant logistics facility space in about two years scheduled to come online in May of this year, even further stimulation of demand is anticipated in the near future. And as competitive prime properties continue to enjoy high occupancy, a trend in interest for new development plans is beginning to surface.
"New supply through 2013 is currently expected to emerge at average volumes, so the balance between supply and demand is unlikely to be disrupted," said Junichi Taguchi, Managing Director of Industrial Services at CBRE. "A certain amount of demand can be expected in the near future from firms handling consumer goods as they relocate for the purpose of consolidation. We can also anticipate that new supply will have the effect of generating even more demand. However, since there is a strong possibility that announcements will be made of new development plans that will add to the amount of supply, there is some concern that supply could concentrate in particular areas. This could conceivably lead to temporary increases in vacancy rates and so it will be necessary to maintain a close watch on developments in the near future. Although the sense that rent levels have reached their bottom is stronger than it was last quarter, most relocations are centered on logistics facility location realignment plans that will presumably lower total cost. It will take some time before we reach the stage where rent levels are increasing."
For detailed data and market conditions for each zone and metropolitan area, please review the "Japan Industrial Market View Q4 2011," published Jan.31.
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