Japan Logistics MarketView Q2 2023

Record net absorption ensures vacancy rate remains unchanged in Greater Tokyo; vacancies drop in other areas

• The vacancy rate for Large Multi-Tenant (LMT) logistics facilities in Greater Tokyo in Q2 2023 was unchanged from the previous quarter at 8.2%. New supply for the period reached 244,000 tsubo, well above the quarterly average over the past two years of 200,000 tsubo, while net absorption set a new single-quarter record of 225,000 tsubo, beating the previous high of 211,000 tsubo (Q3 2019). Effective rents for the quarter fell by 0.7% q-o-q to JPY 4,510 per tsubo/month.  Areas in Ibaraki and Saitama continued to see downward pressure exerted on effective rents.
• The LMT vacancy rate in Greater Osaka fell by 1.4 pp q-o-q to 3.2%. With no new facilities available this quarter, vacancies were filled in several existing properties, including some completed in Q1 2023. Effective rents increased by 0.2% q-o-q to JPY 4,120 per tsubo/month, with rents rising in comparatively cheaper areas in response to falling vacancy rates.
• The LMT vacancy rate in Greater Nagoya fell by 1.0 pp q-o-q to 5.2%. Leasing activity was robust over the quarter, with tenants now confirmed for around 50% of all floor space due to come on stream within the next two quarters. Effective rents remained unchanged q-o-q at JPY 3,590 per tsubo/month.
• The LMT vacancy rate in Greater Fukuoka fell by 0.9 pp q-o-q to 0.9% in Q2 2023. The supply-demand balance in Greater Fukuoka is now so tight that only one property has any vacancies. Effective rents in the area rose by 0.9% q-o-q to JPY 3,410 per tsubo/month.