Japan Logistics MarketView Q2 2024

Greater Tokyo vacancy rate remains unchanged at 9.7%; vacancies fall in Osaka, Nagoya, and Fukuoka

• The vacancy rate for Large Multi-Tenant (LMT) logistics facilities in the Greater Tokyo was unchanged from the previous quarter, ending Q2 2024 at 9.7%. Five new properties with a total floor area of 168,000 tsubo were completed this quarter. Two of these commenced operations at full occupancy, while the remaining three each had vacancies of around 70%. As several major contracts were signed for existing properties, however, total net absorption for the quarter reached 150,000 tsubo, marking the second consecutive quarter in which it exceeded the quarterly average recorded over past five years. Effective rents slid by 0.2% q-o-q to JPY 4,490 per tsubo, the first time since Q4 2021 that effective rents have fallen below the JPY 4,500 mark. 

• The LMT vacancy rate in the Greater Osaka fell by 1.6 pp. q-o-q to 3.7% in Q2 2024. Several major contracts were signed over the quarter, with multiple vacancies absorbed in peripheral areas. The pre-lease rate for the remaining properties due for completion in 2024 rose above 70% during the period. While effective rents remained unchanged q-o-q, standing at JPY 4,160 per tsubo, rents rose in existing facilities in desirable locations or with superior specifications.

• The LMT vacancy rate in the Greater Nagoya dropped by 1.9 pp. q-o-q to 14.6% this quarter. Demand was robust, with the only building completed during the period commencing operations at full capacity, and another added in the previous quarter achieving full occupancy. Effective rents rose by 0.3% q-o-q to JPY 3,640 per tsubo.

• The LMT vacancy rate in the Greater Fukuoka fell 1.7 pp. q-o-q to 3.2%. The sole property completed this quarter came on stream with a high occupancy rate, while multiple vacancies in existing properties were absorbed. Effective rents rose by 0.6% q-o-q to JPY 3,490 per tsubo.