Japan Office MarketView Q3 2024

Tokyo: All-Grade vacancy rate drops for fourth straight quarter

The All-Grade vacancy rate slipped by 0.1 pp. q-o-q to 4.0% in Q3 2024, the fourth consecutive quarterly decline. Net absorption hit 60,000 tsubo, outpacing the quarter’s 53,000 tsubo of new supply. While several new buildings commenced operations at less than full capacity, vacancies in existing buildings were filled during the quarter, particularly those in relatively new buildings. Rents rose across all grades for the fourth consecutive quarter, with a decline in the number of available units pushing up asking rates.

Osaka: Robust demand drives rent hikes across all grades

The Grade A vacancy rate dropped by 0.9 pp. q-o-q to 5.6%, as several vacancies were filled in buildings completed during the first half of the year. Robust tenant demand was observed for all unit sizes, leading the All-Grade vacancy rate to fall by 0.1 pp. q-o-q to 3.4%. Average rents increased across all grades mainly in previously undervalued properties, with CBRE observing very few examples of asking rates being lowered.

Nagoya: Grade A vacancy rate records a large drop

The All-Grade vacancy rate fell 0.9 pp. q-o-q to 4.3%, while the Grade A vacancy rate dropped by 2.7 pp. q-o-q to 4.4%. With no new supply coming on stream during the quarter, vacancies were filled particularly in newer and more competitive properties in prime locations. However, new vacancies did appear in less attractive buildings. All-Grade rents rose by 0.3% from the previous quarter, with owners of several buildings in which vacancies have been recently filled opting to raise their asking rates.

Regional cities: Robust relocation activity as companies look to improve office environments

All-Grade vacancy rates fell q-o-q in seven of the 10 cities surveyed, rising in the other three. Tenant demand remains strong across the country as companies relocate to improve office environments to attract quality talents. All-Grade rents for the quarter rose q-o-q in nine of the 10 cities surveyed, falling in just one. Landlords of properties with below-average rents implemented hikes, pushing up rents in most cities.