CBRE Research Publishes Q3 2017 Japan Retail MarketView

CBRE Research Begins to Report Ginza High Street Vacancy Rate – 0.8% Recorded for Q3 2017

Tokyo, November 8, 2017 - CBRE Research today released its Q3 2017 Japan Retail MarketView covering retail market trends in Tokyo, Osaka, and Nagoya.

  • The number of tourists visiting Japan rose by 18.9% y-o-y to 2,280,000 in September, a record high for that month.
  • August department store sales rose y-o-y for the first time in two months, up 2% y-o-y. The month saw strong sales of luxury goods, mainly due to domestic high net-worth consumers and inbound tourists, with sales of art, jewelry, and precious metals rising by around 10%.
  • In August, duty-free sales at department stores rose 70.2% y-o-y to JPY 21.5 billion, the fourth highest on record. Average spending per customer also rose by around 20% to JPY 67,000.

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

Tokyo prime rents (assumed achievable rents) were flat q-o-q at JPY 400,000 per tsubo in Q3 2017, remaining unchanged for the ninth consecutive quarter. In Ginza, there was increasing demand for showroom-style stores, mainly in prime areas. Omotesando/Harajuku saw plenty of demand from retailers seeking space, especially well-located properties, in the area due to its trend-setting status. In Shinjuku, the lack of available space helped new properties to quickly secure tenants. In Shibuya, very few leases were signed this quarter and some properties located slightly away from the station remained vacant. Retailers have become slightly more cautious about opening stores in Shibuya ahead of upcoming redevelopment schemes.

 

After collecting data for the last three quarters, CBRE Research will for the first time start publishing the average rent index for Ginza high streets along with the Ginza retail vacancy rate. For this quarter, the vacancy rate declined by 0.2 points q-o-q to 0.8%, but this was 0.4 points higher compared to Q4 2016, when the survey started. Average rent index has been on a downward trend since peaking in Q2 2016.

"The opening of Ginza Six in April this year has boosted demand for stores in the surrounding area," said Akihisa Sato, senior director of CBRE's Retail Services team. "Shoppers in Ginza have been drawn to the new mall and the area around it, which a lot of retailers expect will help them to attract new customers. However, conversely, some prime areas have also experienced a drop in footfall because visitors are predominantly spending their time in the Ginza Six complex."

Osaka (Shinsaibashi, Umeda)

Osaka prime rents (assumed achievable rents) were flat q-o-q at JPY 300,000 per tsubo in Q3 2017, remaining unchanged for the fifth consecutive quarter. Shinsaibashi once again saw strong demand from drug stores in the Shinsaibashi Suji shopping area south of Nagahori Dori and around Dotonbori. In Umeda, there was strong demand for stores from food retailers, mainly in areas close to the station.

"As a result of more people visiting the Shinsaibashi area, especially foreign tourists, rents have continued to rise," said Tsuyoshi Hashikawa, senior director of CBRE's Kansai Retail Services team. "Drug stores are among the few types of retailers that can afford opening outlets in larger spaces. However, there has been a recovery in demand from luxury watch and jewelry retailers, as spending by high net-worth consumers has been boosted by the bullish stock market. As a result, smaller units have been able to achieve above-market rents. Nevertheless, demand for new stores is concentrated on Midosuji in the south of Nagahori Dori, and owners will find it challenging to let properties farther north."

Nagoya (Sakae)

Nagoya prime rents (assumed achievable rents) were flat q-o-q at JPY 130,000 per tsubo in Q3 2017, displaying no movement for the second consecutive quarter. A large property in a prime area was let to a drug store, which lodged the highest bid among a number of competing retailers. Several luxury brands are considering opening stores in a well-located new development at comparatively high rents.

"Drug stores remain keen to open new outlets," said Hideo Oue, senior director of CBRE's Nagoya Retail Services team. "During the quarter, a drug store outbid several other competing retailers for a well-located property in a prime area. However, some drug store chains opted not to proceed with new openings, most likely because they had become more cautious towards the outlook for margins. Therefore, even among drug stores, only a limited number of brands are likely to continue looking for new outlets."

A detailed discussion of market conditions can be found in the Q3 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
Q3 2017 Japan Retail MarketView​​

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