CBRE released today its Q4 2014 report on retail property market trends in Tokyo and other major Japanese cities.
Hot Topics
- Japanese consumers are cautious, but spending from overseas visitors is supporting consumption
- Tokyo, Osaka and Nagoya all have very little space to meet demand
- Rents will continue to rise but at a slower pace than in previous quarters
Tokyo (Ginza, Omotesando, Harajuku, Shinjuku, Shibuya)
The core Tokyo retail submarkets continued to enjoy robust demand in Q4 2014. Luxury brands, fast fashion and their sister brands, as well as sportswear brands were particularly active. Rents are forecast to remain on an upward trend, given the strength of demand. However, the rate of increase is likely to be slower than in previous quarters. This is because the recovery in consumption has been weaker than originally expected and prime rents have already increased in some areas.
In Ginza, retailers placed bids for higher than assumptions for one unit on Miyuki Dori, which links two large new developments. In Omotesando, luxury brands and designers moved for location upgrades and sales floor expansions. In Shinjuku, which has even less space available than in other areas, demand from tenants is concentrating on units in new developments. In Shibuya, demand for stand-alone stores is increasingly focusing around Shibuya Station, where several large developments are in the pipeline.
"Ahead of the Tokyo Olympics, and on the back of increases in demand from tourists from overseas, , many foreign retailers believe that now is a good time to open stores," said Shina Fukui, director of CBRE's Tokyo Retail Services team. "In addition to the new entrants, foreign retailers that already have shops in department stores or shopping centers are focusing on opening standalone stores in an effort to raise brand recognition. Jewellery brands are particularly eager to expand, and are prepared to pay high rents for a store in a good location. However, as supply is tight, it will take some time to find the right space to open their stores."
Osaka (Shinsaibashi, Umeda)
Demand remains buoyant in both of Osaka's two core sub-markets, Shinsaibashi and Umeda. Several major retailers opened stores in new developments during the quarter. These new stores boosted footfall in the area as a whole. Growth in the number of foreign tourists visiting the Greater Osaka region has been faster than the national average. It has even outpaced the Greater Tokyo area, and has helped to reinvigorate the region and strengthen its profile as a major retail destination. The limited volume of new supply in the pipeline will be insufficient to fully absorb demand, and market rents are likely to continue rising.
"Several major retailers opened stores this quarter, all of them in redeveloped buildings" said Tsuyoshi Hashikawa, senior director of CBRE's Kansai Retail Services team. "New flagship and other large stores are mostly opening in new properties because it is difficult to secure units in existing buildings. While many tenants view Osaka as an important market and are keen to open stores there, the lack of supply has prevented the market from fully absorbing demand. When additional redevelopment projects are completed, they will help to capture this demand and provide the Osaka retail market with further momentum."
Nagoya (Sakae)
In Sakae, Nagoya's core retail sub-market, it remains difficult for tenants to open new stores as there are still very few existing standalone spaces available. During the quarter, several well-known retailers opened stores in new buildings, which are expected to further invigorate the area. The Nagoya Station area will see the completion of a number large-scale redevelopment projects in the coming years, but it is unlikely that the Sakae area will lose its status as Nagoya's retail hub.
"The retailers which opened new stores during the quarter are very popular with consumers and will help to further energize the market," said Noriyuki Kawamoto, director of CBRE's Nagoya Retail Services team. "However, as supply remains tight, many retailers planning to open stores will have to wait for standalone store spaces to become available while also considering locations in suburban shopping centers. Consequently, when units become available in the area's best locations, they could be let at rents above the market rate for neighbouring sites."
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 52,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 370 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.
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.
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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.
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.