Japan Retail MarketView Q3 2024

Vacancy rate drops below 1% in five of nine areas,
reaching 0% in Shinsaibashi and Sakae

• During Q3 2024, the vacancy rate fell q-o-q in four of the nine surveyed areas, ending the quarter  below 1% in five of the nine. Average rents rose in five of the 10 surveyed areas, with the same four areas as in the previous quarter (Ginza, Shinsaibashi, Kyoto, Kobe) now registering average rents in excess of pre-pandemic levels.
• The steepest drop in the vacancy rate was recorded in Shibuya, where it fell by 2.1 pp. q-o-q to 0.4% on the back of the absorption of a vacant unit by an overseas sporting goods brand. The most significant rise in average rents was seen in Kyoto, where they grew 4.5% q-o-q on the back of a surge in retailer appetite triggered by increased foreign tourist numbers.
• Fashion brands and outdoors/sporting goods brands once again drove demand this quarter. However, the period also saw some overseas retailers adopt a more cautious attitude towards global expansion plans, largely due to concerns for economic uncertainty in China and the U.S.
• Rents are likely to continue to rise nationwide, however, as overseas retailers adopting a more cautious approach are very few in number in Japan, and retailer appetite remains generally robust. Many retailers view this change in stance from some of their rivals as an opportunity to establish new storefront space.