CBRE releases Japan Office ViewPoint, including forecasts for 13 Japanese cities
2013/02/14
CBRE released today its Japan Office ViewPoint, a special report discussing recent movements in the office market, as well as the outlook for 2013.
Noteworthy Trends in 2013
- Business sentiment is improving as business performance has developed, and demand is expected to increase as decisions regarding relocation are made more rapidly
- With the exception of Osaka, new supply is limited nationwide, with vacancy rates generally trending downward
- Tokyo is expected to lead a nationwide turnaround in rental levels
- Large new supply in Osaka in early spring will impact vacancies, which will gradually improve
Overall, vacancy rates declined in 2012, falling in nearly all cities nationwide except for Tokyo, which was impacted by the arrival of a large quantity of supply. One aspect driving demand has been the need to implement business continuity plans (BCP) in response to the Great East Japan Earthquake, and this trend has been spreading nationwide. With rents having adjusted to competitive levels in many cities, there has been an increase in demand for relocations from suburbs to city centers and relocations aimed at upgrading the quality and location of the tenant’s building. There has been an increase in companies moving to expand their offices and relocations out of aging owner-occupied buildings. Tenants are taking a more favorable attitude toward relocation, which can be seen in these trends.
Demand
With the improving economy, business sentiment is expected to strengthen in 2013. As corporate earnings improve, companies will be in a stronger position to make decisions about their relocation or expansion plans, and demand is likewise expected to grow. Tenants nationwide have already been moving to improve the location of their offices, or the quality of the buildings they occupy. Additionally, some tenants are leasing more office space, and moving away from aging owner-occupied buildings. This trend is expected to continue through 2013. With the exception of Osaka, new supply is generally limited. With the flight to quality over the past year, space in prime buildings is now scarce and this is not expected to see a marked change in 2013. In Sapporo, Hiroshima, Fukuoka and other cities, the lack of space in prime buildings will stifle demand. Alternatively, in Yokohama, tenants are focusing on their second choices as space in prime buildings is full.
New supply / vacancy rates
In Osaka, a record-large volume of Grade A supply is scheduled to come online during 2013. The vacancy rate is expected to reflect this, declining as space is absorbed. In Tokyo, the vacancy rate is expected to continue declining, with new supply being only 45% of that coming online in 2012. Through the end of 2013, the overall vacancy rate in the 23 Wards is expected to be approaching the 6% range. In Nagoya, the vacancy rate is expected to continue improving with virtually no new supply in 2012. The Grade A vacancy rate has already reached its lowest point since 2007, and will remain below 2%. This year will be the fourth consecutive year with no new Grade A supply. In other regional cities demand is expected to concentrate in city centers, with limited new supply, and the nationwide vacancy rate is expected to continue declining.
Rent
In 2013, overall nationwide rents are expected to turnaround at large, high quality buildings. There are concerns of a two tier market in rents depending on the age and size of the buildings, but rents are expected to remain flat or increase slightly in many cities. Tokyo Grade A rents are expected to rise gradually through the year, with rents increasing between 3% to 5% in 2013.
For detailed data and market conditions for each metropolitan area, please review the Japan Office ViewPoint report "2013 OVERVIEW".
Attachment: Press Release | Japan Office ViewPoint
Related Links: ViewPoint & Special Report
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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