CBRE Publishes Q1 2017 Japan Retail MarketView

Nagoya Prime Rents Rise 8.3% q-o-q to JPY 130,000 per Tsubo

​Tokyo, May 10, 2017 - CBRE today released its Q1 2017 Japan Retail MarketView covering retail market trends in Japan’s three major cities: Tokyo, Osaka, and Nagoya.

Highlights

  • In March 2017 the number of tourists visiting Japan rose by 9.8% y-o-y to 2,206,000, recording the highest figure for March.
  • In February 2017 duty-free sales at department stores reached JPY 20.1 billion, the second highest figure ever recorded (January 2017 sales take the lead). Although Chinese New Year sales fell in January, for many retailers footfall was just as high in February.
  • In Tokyo, Osaka, and Nagoya, drug stores continued to lead the demand for stand-alone stores.

Tokyo (Ginza, Omotesando, Harajuku, Shinjuku, Shibuya)

In Q1 2017, Tokyo prime rents (assumed achievable rents) were flat q-o-q for the seventh consecutive quarter at JPY 400,000 per tsubo. In Ginza, demand from luxury brands was weak, but leases signed for prime locations on the main streets did not indicate a fall in rents. In Omotesando/Harajuku, the period saw solid demand from sports brands planning ahead for the Tokyo Olympics in 2020. In Shinjuku, where demand is concentrated on the main streets despite a shortage of available space, multiple retailers competed for a single property. In Shibuya, the redevelopment of the station area drove demand as retailers sought good locations within the station’s vicinity.

"Demand from luxury brands remains weak overall," said Akihisa Sato, senior director of CBRE's Retail Services team. "However, for good locations on the main streets, prime rents did not fall as there were some properties where vacant spaces were quickly taken up by luxury retailers. As such, demand from retailers has become more polarized, and is heavily dependent on specifications such as frontage, the size of the floor plate, and which floor it is on."

Osaka (Shinsaibashi, Umeda)

In Q1 2017 Osaka prime rents (assumed achievable rents) were flat q-o-q for the third consecutive quarter at JPY 300,000 per tsubo. In Shinsaibashi, the period continued to see strong demand from drug stores in the Shinsaibashi Suji shopping area and around Dotonbori. However, retailers are becoming more cautious about opening stores in less central locations. In Umeda, which has not traditionally been home to many boutiques, demand was concentrated on properties in new developments.

"Rents continue to be supported by multiple drug stores bidding for a single unit," said Tsuyoshi Hashikawa, senior director of CBRE's Kansai Retail Services team. "However, rents are not increasing as fast as they were and have not lifted prime rents. Drug stores are likely to continue competing for space in new developments or in properties where fixed-term leases are coming to an end. However, in other areas, depending on the property and the location, there will be fewer inquiries than in previous quarters."

Nagoya (Sakae)

In Q1 2017 Nagoya prime rents (assumed achievable rents) rose by 8.3% q-o-q to JPY 130,000 per tsubo (including CAM). The jump was mainly due to properties in good locations on the main streets attracting interest from a wide range of retailers who have yet to penetrate the Sakae area. This competitive environment gave owners a number of bids to select from and allowed them to pick a tenant based on above-market rents.

"Two drug store chains opened large outlets this quarter," said Hideo Oue, senior director of CBRE's Nagoya Retail Services team. "Drug stores have also bid for a number of relatively large properties that are currently being marketed. Other types of retailers join the bids as well, but they generally lose to drug stores because they tend to bid at lower rents."

A detailed discussion of market conditions can be found in the Q1 2017 Japan Retail MarketView published today on the CBRE website.  http://www.cbre.co.jp/JP/research/Pages/MarketViews.aspx?redirect=true

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Press Release
Q1 2017 Japan Retail MarketView​​

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CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (based on 2016 revenue). The company has more than 75,000 employees (excluding affiliates), and serves real estate investors and occupiers through approximately 450 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services.  Please visit our website at www.cbre.co.jp

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