Tokyo, July 21, 2016 - CBRE today published its Q2 2016 industrial market data in Japan.
Key highlights
- New supply in Q2 2016 was 135,000 tsubo, the second highest quarterly figure on record.
- The vacancy rate for the Greater Tokyo area rose 0.6 percentage points q-o-q to 8.9%. This was due to a high volume of new supply entering the market. While the vacancy rate rose, demand remained solid, with net absorption reaching a new quarterly record of 110,000 tsubo.
- The vacancy rate for LMT properties in the Greater Osaka Area fell to 1.9%, with investment in logistics by e-commerce companies driving the demand.
Greater Tokyo Area
In Q2 2016, new supply of large multi-tenant (LMT) properties totaled 135,000 tsubo across seven new facilities, a volume record second to Q4 2015. Although the vacancy rate increased by 0.6 percentage points q-o-q to 8.9%, primarily as a result of new supply over 100,000 tsubo entering the market for the third consecutive quarter, demand in the Greater Tokyo area remained solid, with four out of the seven new facilities reaching completion with full occupancy. Leases signed this quarter also signified high levels of demand, with major tenants in the apparel and general merchandise sectors completing deals. As a result, net absorption in Q2 2016 was 110,000 tsubo, a new quarterly record.
The vacancy rate was unchanged in the Tokyo Bay area. The Gaikando area vacancy rate rose to 7.4% because of space unlet in a newly completed property. Vacancy in the Route 16 area was relatively stable despite a wave of new supply, with the rate declining from 8.8% in Q1 2016 to 7.8% in Q2 2016. In the Ken-O-do area, which is further away from central Tokyo, the vacancy rate rose again q-o-q to 19.7%.
"Several large tenants - mainly retail and online shopping companies that are enjoying strong earnings – have relocated or opened new facilities in Q2 2016, taking up around 10,000 tsubo each," commented Maro Kobayashi, head of CBRE’s Industrial Services group. "Meanwhile, due to the large number of new properties, some facilities in the Route 16 and Ken-O-do areas are seeing some weakness in rent.”
Greater Osaka Area
In the Greater Osaka Area, the vacancy rate declined from 3.4% in Q1 2016 to 1.9% in Q2 2016. One property that was completed this quarter entered the market fully occupied and several units in existing properties were also let, thanks to strong demand from e-commerce companies. E-commerce companies are continuing to increase their investment in the logistics sector in the Greater Osaka area.
"Although over 200,000 tsubo of new supply is expected in inland areas, the actual number of properties is limited," commented Kenji Kitamura, senior director of CBRE's Osaka Industrial Services group. "As such, tenants looking for large spaces are increasingly keen to secure properties as early as possible."
Greater Nagoya Area
In the Greater Nagoya area, while a series of LMT property completions are scheduled after the following year, some have already started to sign up tenants. It is a new phenomenon for landlords to begin letting properties at such an early stage, reflecting the robust demand for large logistics facilities.
For further details of market trends and forecasts as well as detailed market data by area, please refer to the Q2 2016 Japan Logistics MarketView, scheduled for release on July 29. 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
Source: CBRE, Q2 2016
Chart 2: Greater Osaka LMT Market: Supply/Demand Balance
Source: CBRE, Q2 2016
■ Vacancy Rate of LMT
■ Vacancy Rate and Effective Rent Index By Area of LMT in the Greater Tokyo Area
Download PDF
Press ReleaseAbout 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.