Japan Retail MarketView Q4 2024

Average rents rise in six areas; ​
prime rents reach record highs in three

• Average rents rose q-o-q in six of the 10 surveyed areas in Q4 2024. With rents in the Tenjin area rising above pre-COVID levels, the number of areas with rents exceeding those prior to the pandemicreached five (the others are Ginza, Shinsaibashi, Kyoto, and Kobe). Prime rents also rose in four areas (Ginza, Omotesando/Harajuku, Sakae, and Tenjin) this quarter, setting new record highs in three areas except for Sakae.
• Vacancy rates fell q-o-q in three of the nine surveyed areas this quarter, rising in one. As in the previous quarter, vacancy rates below 1% were registered in five of the nine. The steepest drop in vacancy was recorded in Kobe, which saw a decline of 3.2 pp. q-o-q to 2.1% on the back of new major store openings by apparel and sporting goods brands.
• The fashion category, particularly wristwatch and eyewearretailers, continued to drive demand, while new stores were opened by multiple luxury and outdoors/sporting goods retailers.
• CBRE projects rents to continue to rise nationwide. Demand remains strong from retailers that have not been able to secure spacedueto the limited units available. Also, with available units for relocation remaining scarce, existing retailers are more likely to extend their current leases. Competition between existing and new tenants may push up achievable rent levels significantly.