Japan Retail Brief: Selecting retail tenants in the post-pandemic environment

CBRE’s most recent survey of owners of buildings in Japan featuring ground-floor retail units revealed that the factors other than rent levels they prioritise when selecting tenants are retailer’s risk tolerance (to ensure stable rent payment) and how potential tenants’ characteristics and retail strategies might affect properties and their existing tenants.

In recent years, it has become increasingly difficult for retailers to secure space along Japan’s high streets, with fierce competition between retailers for available units. A willingness to pay the owners’ asking rent has become the bare minimum to even begin negotiations. This also means that in addition to the ability to successfully negotiate contract terms and conditions, communication is more important. Required skills for retailers include quickly and accurately assessing the factors a landlord is looking for in a tenant; ensuring the company position is unified and fully communicated before negotiations begin; and making an effective and easily understood presentation outlining their risk tolerance and the positive effects the opening of a store would have.