Japan Logistics MarketView Q1 2023

April 28, 2023

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Unprecedented supply pushes vacancy up to 8.2% in Greater Tokyo

‒The vacancy rate for Large Multi-Tenant (LMT) logistics facilities in Greater Tokyo rose by 2.6 pp q-o-q in Q1 2023, reaching 8.2%. A record single quarter total of 324,000 tsubo of new supply across 11 properties came on stream during the period, with occupancy in newly completed properties reaching only 33%. Demand remained strong, however, with net absorption logging 154,000 tsubo, well above last year’s quarterly average of 122,000. While the polarisation of rents based on location and specifications continued to be observed, average effective rents remained unchanged from the previous quarter at JPY 4,540 per tsubo.

‒The LMT vacancy rate in Greater Osaka reached 4.6%, up 2.9 pp q-o-q. Osaka saw record-high new stock of 121,000 tsubo this quarter. Effective rents slipped by 0.5% q-o-q to JPY 4,110 per tsubo as a result of multiple new properties completed in low-rent areas. Rents rose in areas where leasing is proceeding smoothly.

‒The LMT vacancy rate in Greater Nagoya fell by 2.3 pp q-o-q to 6.2%. There are now a total of just four facilities, including the two launched this quarter, with vacancies. Effective rents eased by 0.3% to JPY 3,590 per tsubo as a result of the two new properties completed in peripheral, low-rent areas.

‒While the vacancy rate for LMT logistics facilities in Greater Fukuoka increased by 0.8 pp from the previous quarter, it remained low, at 1.8%. Rising rents in the Tosu region pushed up effective rents for the area as a whole by 0.6% q-o-q to JPY 3,380 per tsubo.