CBRE today released data on rental market trends during the first quarter of 2012 for large multitenant logistics facilities in Greater Tokyo and Greater Osaka.
Noteworthy Trends
- The supply-demand balance tightened for large existing facilities, bringing vacancy rates down to 4.5% in Greater Tokyo, and 0% in Greater Osaka.
- Amid high occupancy at prime logistics facilities, inventory is scarce, and industry players appear to have an appetite for development.
The vacancy rate for Greater Tokyo during the first quarter of 2012 fell 0.7 points to 4.5% in a third consecutive quarter of decline. Due to a lack of new supply during the quarter, prime large facilities built in 2011 and state-of-the-art facilities owned by large real estate investment firms maintained occupancy at high levels, with contiguous vacant inventory becoming scarce.
During this quarter, relocations for the purpose of integration amid cost-cutting were observed, as were inquiries primarily from logistics firms attracting cargo owners who handle consumer goods. However, the restriction of supply that has continued since 2010 has led to a prominent shortage of prime facilities. The resulting tightening of the supply-demand balance has limited the relocation choices available, leading to an evident wait-and-see attitude among firms that foresee new supply coming online during the next quarter and thereafter.
Amid a lack of new supply in Greater Osaka as well, all existing large-scale rental facilities (10,000 tsubo and over) that were on the market were leased by the end of the quarter, resulting in completely full occupancy of all rental facilities on the market. The May completion of the first new large-scale multitenant logistics facility to come online in three years is expected to further stimulate demand.
However, with industry players eager to develop top-quality facilities due to their anticipated firm demand and high occupancies, there are possibilities of new development plans being announced for 2013 and thereafter. This is leading to concern that supply could concentrate in certain areas, and that future trends should be cautiously monitored. Rent levels have bottomed out due to the shortage of supply, but with tenants taking a wait-and-see stance given the upcoming supply, drastic increases in rents do not appear to be imminent.”
For details, please refer to the PDF file.
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