Limited Incoming Supply Suggests Markets Will Remain Tight
Tokyo, October 25, 2016 - CBRE (Head Office in Japan: Marunouchi, Chiyoda-ku, Tokyo) today released a ViewPoint report, "Office Market in Regional Cities," which outlines the office market conditions in the eight major regional cities in Japan - Osaka, Nagoya, Sapporo, Sendai, Yokohama, Kanazawa, Hiroshima, and Fukuoka (hereby "regional cities") - and a forecast of market conditions leading up to 2020.
- Vacancy rates in the regional office markets are either recording new lows (e.g. Sapporo, Hiroshima, and Fukuoka) or are fast approaching new lows.
- In most of the regional cities, although there is strong demand from companies wanting to open new offices or expand, it cannot be met due to the lack of available space.
- In Tokyo, new supply will average 207,000 tsubo per year until 2020 (the five year total would account for 16% of existing office space as of the end of 2015). In contrast, new supply in the regional cities is limited to 37,000 tsubo per year, one-sixth the figure for Tokyo, and equivalent to a mere 5% of existing office space at the end of 2015. In particular, there is hardly any new supply planned in Sapporo, Sendai, or Hiroshima.
- CBRE forecasts that net absorption between 2016 and 2020 will average 192,000 tsubo per year in Tokyo, and 55,000 tsubo per year in the regional cities. As a result, the vacancy rate in Tokyo is expected to rise as new supply will exceed new demand. On the other hand, in the regional cities, vacancy rates are expected to fall further as new demand will exceed new supply. Some cities already record vacancy rates lower than Tokyo, but going forward, it is highly likely this will be true for the aggregate vacancy rate of the regional cities.
For details of this ViewPoint, please check our website.
http://www.cbre.co.jp/EN/research/Pages/Special-Reports-ViewPoints.aspx
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Press Release
Japan Regional Office Market ViewPoint October 2016
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