Tokyo, January 23, 2017 - CBRE today released its Q4 2016 logistics market data in Japan’s three major areas: Greater Tokyo, Osaka and Nagoya.
Highlights
- Demand remains strong; net absorption in the Greater Tokyo Area was 63,000 tsubo in Q4 2016 and 2016 reached an annual record of 340,000 tsubo
- After rising to 9.1% in Q3 2016, the vacancy rate fell to 6.8% in Q4 2016; it is taking longer for new properties to find tenants but the vacancy rate should fall further as there will be little new supply in Q1 2017
- The Greater Osaka Area vacancy rate jumped to 11.4% in Q4 2016; as supply increases, tenants are biding their time before committing to space in waterfront areas
- In the Greater Nagoya Area, the vacancy rate rose from 0.0% in Q3 2016 to 2.6% in Q4 2016; the market however is still tight, with space only available in one facility
Greater Tokyo Area
In Q4 2016, new supply of LMT* properties in the Greater Tokyo area was just 9,800 tsubo in one facility, marking a drastic change in the amount of new supply – something that has hovered around 100,000 tsubo level every quarter since Q4 2015. The vacancy rate also fell significantly this quarter as spaces available in properties completed over the last year were steadily filled. It declined by 2.3 points q-o-q to 6.8%. New supply in 2016 as a whole, 360,000 tsubo, was a historical record, while net absorption also reached a new high of 340,000 tsubo, well above the previous record of 220,000 tsubo in 2015.
* Note: "LMT" = Large Multi-Tenant Logistics Facilities
Comparing the four areas of Greater Tokyo, the vacancy rate only increased in the Tokyo Bay Area - it rose by 9.8%. In the Gaikando Area, the vacancy rate declined to 3.5% and in the Route 16 Area, it declined for a third consecutive quarter to 5.4%. In the Ken-O-do Area the vacancy rate slumped from 23.4% in Q3 2016 to 16.9% in Q4 2016.
"Demand from tenants remains firm. However, because there is a large volume of new supply in the pipeline and therefore plenty of choice for tenants, companies are taking more time to reach a decision," commented Wataru Sato, senior director of CBRE's Tokyo Industrial Services group. "Apart from location and tenants' specific requirements, staff recruitment is becoming an important factor that is influencing companies’ choice of property."
Greater Osaka Area
In the Greater Osaka LMT market, new supply hit a record high of 146,000 tsubo in 2016, and net absorption totaled 90,000 tsubo, second only to the 2014 record of 98,000 tsubo. However, the vacancy rate surged from 6.9% in Q3 2016 to 11.4% in Q4 2016 due to one new facility in the waterfront area reaching completion with unlet space remaining.
"The rapid increase in new supply has prompted tenants to adopt a wait-and-see approach, especially in waterfront areas, as there is so much choice," commented Kenji Kitamura, senior director of CBRE's Kansai Industrial Services group. "That said, there is still considerable potential demand for large facilities in general."
Greater Nagoya Area
In the Greater Nagoya Area, the LMT vacancy rate rose from 0.0% in Q3 2016 to 2.6% in Q4 2016, but the market remained tight, with space available in only one facility. There will be five new facilities completed in Q1 2017, but 80% of the spaces in them have already secured tenants.
"There is a considerable amount of new supply in the pipeline but a glut is unlikely," said Haruo Ishikawa, senior director of CBRE's Nagoya Industrial Services group. "In fact, the new supply is likely to spur some logistics companies to seriously consider expanding."
For further details of market trends and forecasts as well as detailed market data by area, please refer to the Q4 2016 Japan Logistics MarketView, scheduled for release on January 31. The MarketView will be published on the CBRE Japan website at http://www.cbre.co.jp/EN/research/Pages/MarketViews.aspx.
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
Download PDF
Press ReleaseJapan Logistics MarketView Q4 2016
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 (based on 2016 revenue). The company has more than 75,000 employees (excluding affiliates), and serves real estate investors and occupiers through approximately 450 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.co.jp
Official Twitter account for Japan: @cbrejapan
Disclaimer
Neither CBRE nor its affiliated companies make any warranties or claims on the implied accuracy of the information contained herein.