Japan Retail MarketView Q1 2025

0% vacancy rate reported in four areas;
Average rents rise to record highs in six areas

• Average rents rose q-o-q in eight of the 10 surveyed areas in Q1 2025, remaining unchanged in the other two. With rents in the Omotesando/Harajuku and Shibuya areas exceeding pre-COVID-19 levels for the first time, the number of areas with rent levels above those prior to the pandemic totaled seven at quarter’s end. Average rents rose to the highest in six areas (Omotesando/Harajuku, Shibuya, Shinsaibashi, Kyoto, Kobe, and Tenjin) since CBRE’s surveys began.
• The vacancy rate fell from the previous quarter in five areas, bringing the number of areas with a 0% vacancy rate to four (Ginza, Shibuya, Shinsaibashi, and Sakae). The steepest drops in the vacancy rate were recorded in Kyoto and Kobe. Several new stores were opened in Kyoto this quarter by fashion retailers, while multiple long-term vacancies were absorbed in Kobe.
• Fashion retailers once again drove demand this quarter, with several new store openings in Shinjuku seen from domestic wristwatch and eyewear retailers.
• CBRE projects rents to continue to rise nationwide. An upward adjustment has been made to the average rent forecast for Ginza on the back of burgeoning demand from retailers with ample financial capacity. With strong demand from luxury brands, particularly those reporting solid earnings, competition among retailers for limited floor space should remain intense.