Japan Retail MarketView Q2 2024

Shinsaibashi vacancy rate drops to lowest nationwide;​

Shinjuku records significant drop in vacancy to just above 2%​

• Vacancy rates fell on a q-o-q basis in four of the nine surveyed areas, with that in Shinsaibashi dropping to just 0.6%, the lowest level nationwide. Average rents rose in two of 10 surveyed areas, with the same four areas as in the previous quarter (Ginza, Shinsaibashi, Kyoto, Kobe) registering average rents above the pre-pandemic levels.​
• The steepest drop in vacancy was recorded in Shinjuku, where vacancy fell 3.0 pp., on the back of the absorption of a relatively large vacancy by an apparel brand. The largest rise in average rents was seen in Shibuya, which logged an increase of 8.6%, reflecting retailers’ strong appetite for new store space.​
• Fashion brands and outdoor/sporting goods brands once again drove demand this quarter. Total new store openings across the country declined q-o-q due to fewer available units, which is encouraging retailers to turn their attention to future supply.​
• Demand for store space remained strong from luxury brands and other retailers, with weaker Yen helping to drive robust inbound tourist demand. While a lack of availability is likely to slow the pace of new store openings in the coming quarters, strong leasing demand should ensure rents trend upward.​