CBRE releases Q4 2012 data on office building market trends for 13 cities nationwide
2013/01/16
CBRE today released data on office building market trends for 13 major cities
nationwide for Q4 2012.
Noteworthy Trends
- Tokyo’s Grade A vacancy rates decreased to 8.8%, remaining flat at 7.5% for the 23 wards.
- Grade A vacancy rates in Osaka fell significantly to 8.7%, while Nagoya’s Grade A vacancy rate of 1.8% reflected tight supply.
- Nationwide vacancy rates continue to decline with tenants keen to relocate and demand increasing in a wide range of areas.
- Scattered cases of rents rising centering on large buildings in select areas of Tokyo and Osaka, and in some regional cities.
Tokyo’s 23 Wards
The Grade A vacancy rates in Tokyo fell 0.5 points quarter-on-quarter to 8.8%
as one Grade A building was completed in the fourth quarter at almost full
occupancy. Assumed achievable rents were flat at 29,800yen per tsubo, down just
100yen quarter-on-quarter. With large-scale relocations easing in Tokyo’s 23
wards, the vacancy rate remained unchanged at 7.5%. Mid-sized and smaller
relocations drove demand. Inquiries in the fourth quarter were healthy, with
demand increasing at mid-sized buildings. Tenants were looking for larger spaces
with improved locations and quality.
“As rents at some well-located prime buildings are starting to rise, the
market is looking favorably at the improved economic impact of the new
government subsequent to the elections in December. At times like these we often
see a gap in attitude between owners and tenants on rent increases, and by the
end of this year rents may jump if tenants start competing for space,” said
Yoshihiro Watanabe, Executive Managing Director of Office Brokerage Services at
CBRE.
Osaka
The vacancy rate for Grade A buildings in Osaka dropped 2.9 points from the
previous quarter to 8.7% as a landmark Grade A building was completed this
quarter with high occupancy. The vacancy rate of Osaka dropped for the fifth
consecutive quarter to 9.4%, down 0.4 points quarter-on-quarter. Relocations
from tenant-owned buildings and other trends implying an increase in demand
continued pushing the vacancy rate down with demand concentrated at
high-specification buildings with the latest earthquake resistance standards.
Assumed achievable rent at Grade A buildings increase marginally to 18,900yen
per tsubo, an increase of 200yen over the previous quarter.
“Inquiries have increased for a large-scale project that is expected to be
completed next quarter,” said Takashi Katono, Head of the CBRE Kansai Regional
Office. “While the retail zones are fully pre-leased, the office is attracting
tenants from owner-occupied buildings and large buildings in the surrounding
area. Vacancies could go up temporarily but we expect demand to be strong going
forward.”
Nagoya
In Nagoya, supply has tightened with no new Grade A buildings coming online
in the last three years. This pushed the Grade A vacancy rate down by 0.9 points
quarter-on-quarter to 1.8%. The assumed achievable rent was virtually unchanged
at 22,200yen per tsubo, an increase of 50yen from the previous quarter. The
situation is expected to continue, reflecting the scarcity of Grade A space in
the market. Nagoya’s city-wide vacancy rate has declined for ten consecutive
quarters, with the vacancy rate declining a mere 0.1 points quarter-on-quarter
to 11.3%. Tenants are increasingly looking to expand with demand concentrated
around the Nagoya Station area, where supply is tight and lacks the availability
of large contiguous spaces in prime buildings.
“Since there is going to be virtually no new supply in Nagoya in the next two
years, the vacancy rate is expected to continue declining,” said CBRE Nagoya
Office Senior Director Noriyuki Tsutsui. “Recently, we’ve seen an increase in
inquiries related to business continuity measures from Nagoya branch offices of
companies with nationwide operations. As the vacancy rate declines, we can
expect an increase in demand at office buildings outside of the Nagoya Station
area, as the area around the station does not have enough supply to meet tenant
needs.”
Nationwide
Vacancy rates are mostly declining throughout Japan, as companies are keen to
relocate. There is an increasing trend for relocations to larger offices, due to
companies expanding or upgrading their office space. However prime buildings
that meet tenant needs are becoming scarce in many cities. This is pushing
tenants to buildings that are farther from stations, or older buildings with
competitive rents that previously struggled to find tenants. While there has
been some slight weakening of asking rents in some cities, asking rents overall
are largely flat or slightly improving.
For detailed data and market conditions for each zone and metropolitan area,
please review the "Japan Office Market View Q4 2012," published Jan.30.
Attachment: Press Release
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About CBRE Group, Inc.
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 (in terms of 2014 revenue). The Company has more than 70,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 400 offices (excluding affiliates) worldwide. CBRE offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. Please visit our website at www.cbre.com.
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Disclaimer
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