Japan Logistics MarketView Q1 2024

Vacancy rate approaches 10% in Greater Tokyo;  Lower vacancies drive rents up in Greater Osaka and Fukuoka

• The vacancy rate for Large Multi-Tenant (LMT) logistics facilities in Greater Tokyo rose by 0.4 pp. q-o-q to 9.7% in Q1 2024. New supply consisted of 190,000 tsubo across 10 buildings, which achieved a total occupancy rate of over 50% upon completion, but net absorption fell below the 2023 quarterly average, registering 148,000 tsubo. The vacancy rate for existing facilities (facilities more than one year old) spiked from 2.7% in Q4 2023 to reach 4.4%, representing the highest level recorded since Q1 2012, due to  vacancies in fringe areas taking considerable time to fill. Effective rents in Greater Tokyo fell by 0.4% q-o-q to JPY 4,500 per tsubo.

• The LMT vacancy rate in Greater Osaka fell by 0.7 pp. q-o-q to 5.3%. Two of the three new properties completed this quarter commenced operations at full capacity, with the third also launching with a high occupancy rate. With vacancies restricted to certain suburban areas and properties, and pre-leasing for the next two quarters proceeding well, the market is tight on the whole. Effective rents increased by 0.7% q-o-q to reach JPY 4,160 per tsubo.

• The LMT vacancy rate in Greater Nagoya rose by 6.0 pp. q-o-q to 16.5% due to two new facilities entering the market with some units still vacant. Existing vacancies are primarily in the waterfront area of Yatomi City and regions further west, while stable demand has been observed for facilities in inland areas and eastern Aichi Prefecture. Effective rents remained unchanged q-o-q at JPY 3,630 per tsubo.

• The LMT vacancy rate in Greater Fukuoka fell 3.2 pp. q-o-q to 4.9%. With all four of the quarter’s new facilities launching at full or high occupancy, new supply and net absorption rose to all-time records this quarter. Effective rents increased by 0.6% q-o-q to JPY 3,470 per tsubo.