Vacancy Rate for LMT Properties Falls to 5.1% in Greater Tokyo, Rises in Greater Osaka Due to New Supply

Tokyo, July 20, 2017 - CBRE today released its Q2 2017 logistics market data in Japan’s three major areas: Greater Tokyo, Osaka, and Nagoya.


  • The vacancy rate for Large Multi-Tenant Logistics Properties (“LMT”) in the Greater Tokyo Area fell to 5.1% in Q2 2017. Net absorption stood at 96,000 tsubo, the third highest quarterly total recorded.
  • In Tokyo’s Route 16 Area, the vacancy rate fell to 1.9%, equalling the lowest level since the global financial crisis. In the Ken-O-do Area it also fell to 15.5% as several large leasing contracts were signed. The vacancy rate was flat in the Tokyo Bay Area and rose slightly in the Gaikando Area as new supply entered the market.
  • The Greater Osaka Area LMT market registered a net absorption of 50,000 tsubo, the third highest quarterly total on record. However, this was lower than the 70,000 tsubo of new supply that was also completed during this period, consquently increasing the vacancy rate to 18.4%.
  • The Greater Nagoya Area LMT market saw a large volume of new supply for the second consecutive quarter. This led to a rise in the vacancy rate from 8.5% in Q1 2017 to 18.0% in Q2 2017. However, demand remained solid and since there will be no new supply in H2 2017, the vacancy rate is expected to decline over the next coming quarters.

Greater Tokyo Area

In Q2 2017 the vacancy rate for LMT properties in the Greater Tokyo Area declined by 1.4 points q-o-q to 5.1%. Demand from general e-commerce as well as apparel sectors remained buoyant, and net absorption in the Greater Tokyo Area was 96,000 tsubo, the third highest quarterly total on record. In the Route 16 Area, where demand has always been stable, the vacancy rate fell to 1.9%, a record low for the area post the global financial crisis, alongside Q2 2013. The vacancy rate also fell in the Ken-O-do Area from 19.8% in Q1 2017 to 15.5% Q2 2017 as several large leasing contracts were signed. However, tenant activity in general remains relatively sluggish in the area, and it still carries a large volume of available space in properties completed over the last 12 months.

" The ability to attract tenants now varies by property,” commented Wataru Sato, senior director of CBRE's Tokyo Industrial Services group. “Locations where staffing is relatively easy and properties which enable efficient operations have seen tenants sign leases even before they are completed. On the other hand, there are few enquiries for locations where hiring could be difficult and/or multi-story buildings without truck ramps which would limited choices of rentable area. "

Greater Osaka Area

In the Greater Osaka Area LMT market, the vacancy rate stood at 18.4% in Q2 2017, even higher than last quarter's 17.4%, which was itself a sharp increase. Net absorption registered 50,000 tsubo, the third highest quarterly level on record, while new supply was 70,000 tsubo, the second highest quarterly total. The recent rise in the vacancy rate is arguably a result of excess supply, rather than a contraction in demand.

"The downtrend in rents and the diversification of leasing terms and locations have inspired tenant demand," commented Kenji Kitamura, senior director of CBRE's Kansai Industrial Services group. "E-commerce firms and manufacturers of household items, who tend to sign large contracts, are the main drivers."

Greater Nagoya Area

In the Greater Nagoya Area LMT market, the vacancy rate surged from 8.5% in Q1 2017 to 18.0% in Q2 2017, following a second consecutive quarter of large volume of new supply. However, demand remained solid, as seen by several large leasing contracts signed by tenants renting an entire property, as well as enquiries for spaces scheduled to be completed next quarter and beyond. This lead to effective rents rising by 0.9% (JPY 3,530/tsubo), despite the jump in vacancy rate.

"The rise in vacancy rate was within the expected range," commented Haruo Ishikawa, senior director of CBRE's Nagoya Industrial Services group. "Increase in supply is giving tenants an opportunity to improve their location and facilities. As there will be no new supply until Q1 2018, vacant space should be steadily filled in the next coming quarters."

For further details on market trends and forecasts, as well as market data by area, please refer to the Q2 2017 Japan Logistics MarketView, scheduled for release on July 31. The MarketView will be published on the CBRE Japan website at

Chart 1: Greater Tokyo LMT Market: Supply/Demand Balance


Chart 2: Greater Osaka LMT Market: Supply/Demand Balance


Chart 3: Greater Nagoya LMT Market: Supply/Demand Balance


■LMT Vacancy Rate and Effective Rent Index By Area

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Press Release
Japan Logistics MarketView Q2 2017

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