Japan Brief: Diversification of retail leasing demand may lead to sustained rental growth

Demand for street-level storefront space has begun to diversify since 2023, while the ability to afford higher rents spread to a wider range of retail sectors in 2024, pushing rents upward nationwide. 

This diversification of demand will benefit retail landlords as it should lead to the stabilization of overall demand. Should retail sales in certain sectors decline in future, demand from other sectors should be sufficient to largely offset any potential negative impact.

CBRE expects 2025 to bring a continuation of the pattern for multiple retailers to compete for limited vacancies, pushing up rent levels. With these retailers operating across a wide range of sectors, competition is likely to remain intense, leading to a strong probability of further rent increases.