Japan Office MarketView Q4 2023

January 30, 2024 10 Minute Read

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Tokyo: Rents rise across all grades for first time in three years

The vacancy rate fell q-o-q in all grades in Q4 2023, with vacancies filled in new and recently completed buildings driving net absorption up to 83,000 tsubo, roughly double the recent quarterly average. Rents rose across all grades for the first time since Q1 2020. During the quarter, CBRE observed several cases in which previously lowered rents were raised again in buildings where vacancies were filled.


Osaka: Vacancy falls in all grades


Vacancy declined q-o-q for all grades this quarter. The Grade A vacancy rate fell for a fifth straight quarter, down by 0.6-ppt q-o-q to 2.4%. Thanks to robust tenant demand for both large and small units, vacancies were filled in a wide range of buildings, regardless of grade. All-Grade rents rose by 0.6% from the previous quarter, with rent hikes observed in some smaller well-located buildings, which are unlikely to face competition from the new supply slated to come on stream in 2024.


Nagoya: Grade A rents rise for second straight quarter


The All-Grade vacancy rate for the quarter dropped by 0.2 pp. q-o-q to 5.6%, with vacancies filled in more competitive buildings with sought after facilities or in superior locations. Demand was driven by tenants looking to upgrade their offices; improve location; expand floor space; open new offices; or move to temporary premises for the purposes of rebuilding. All-Grade rents rose by 0.1% from the previous quarter, with the period witnessing several instances of rents that were previously lowered being raised once more in buildings either where vacancies were filled or strong tenant interest was seen.



Regional cities: Some cities report higher vacancy due to new supply but demand remains robust nationwide


The All-Grade vacancy rate for the quarter rose q-o-q in six of the 10 surveyed cities; remained unchanged in one; and fell in the remaining three. While the vacancy rate rose on the back of new supply in some cities, robust nationwide demand was observed over the quarter, with many companies looking to upgrade or move to superior locations or open new premises. All-Grade rents for the quarter rose q-o-q in five of the 10 cities surveyed; remained unchanged in two; and fell in the remaining three, with the nationwide trend for declining rents showing signs of easing.