CBRE Publishes Q2 2017 Japan Retail MarketView

Prime Rents in All Three Major Cities Remain Unchanged Quarter-On-Quarter

Tokyo, August 9th, 2017 - CBRE today released its Q2 2017 Japan Retail MarketView covering retail market trends in Tokyo, Osaka, and Nagoya.

Highlights

  • In June 2017 the number of tourists visiting Japan rose by 18.2% y-o-y to 2,247,000, the highest ever figure recorded for that month.
  • Also in the same month, duty-free sales at department stores went up 41.4% y-o-y to JPY 18.4 billion, recording a seven consecutive monthly increase. The spending per customer also rose 10% to JPY 63,000.
  • Drugstores continued to drive demand for standalone stores in Tokyo, Osaka, and Nagoya.

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

Tokyo prime rents (assumed achievable rents) were flat for the eighth consecutive quarter in Q2 2017 at JPY 400,000 per tsubo. In Ginza, several retailers sought spaces in properties located close to the main street. In Omotesando and Harajuku, a number of flagship stores and pop-up stores opened as the area’s trend-setting reputation continued to draw large numbers of visitors. In Shinjuku, an apparel brand decided to open an outlet store in an area with few retail stores, while in Shibuya, several domestic retailers opened large stores with over 1,600 tsubo of sales floor space.

Akihisa Sato, senior director of CBRE's Retail Services team, commented, "There is a shift in the type of retailer seeking to open stores. Manufacturers, whose main sales channel was previously general merchandising stores, have started looking for standalone stores on the main street. Many of these retailers can afford expensive rents and their required floor area is relatively large. As there are still very few vacant spaces on the main street, it could take some time for them to open stores. However, once they are able do so, in some cases, rents could exceed the market level."

Osaka (Shinsaibashi, Umeda)

Osaka prime rents (assumed achievable rents) were flat q-o-q for the fourth consecutive quarter at JPY 300,000 per tsubo. In Shinsaibashi, Q2 2017 continued to see strong demand from drugstores in the Shinsaibashi-suji shopping area, south of Nagahori-dori, as well as around Dotonbori. In Umeda, the quarter saw solid demand from wedding and other service sectors as the area is easily accessible from neighboring prefectures.

Tsuyoshi Hashikawa, senior director of CBRE's Kansai Retail Services team, commented, "Demand from drugstores remained buoyant this quarter while other sectors kept their cautious stance to these higher-than-preferred rents. As a result, in some cases, retailers whose fixed-term leases were coming to an end withdrew from renewal negotiations and were then replaced by drugstores. However, demand is generally weak in the area north of Nagahori-dori, meaning that some owners in the area may be forced to lower rents."

Nagoya (Sakae)

Nagoya prime rents (assumed achievable rents) were flat q-o-q at JPY 130,000 per tsubo (including CAM). Only drugstores are the ones who would consider opening relatively large stores. For this reason, in areas not considered by drugstores, some owners are considering sub-dividing units in line with retailer demand.

"Two large drugstore chains opened stores in Q1 2017 and other retailers from this sector also remain keen," said Hideo Oue, senior director of CBRE's Nagoya Retail Services team. “In secondary areas, drugstores have been contracted at above-market rents, and several others are still looking for properties. However, as some owners restrict which sectors they lease space to, this may limit drugstores’ actual openings."

A detailed discussion of market conditions can be found in the Q2 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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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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