An Analysis of Greater Tokyo LMT Pre-Leasing Rates

Does a declining pre-leasing rate indicate weakening tenant demand?

Owing to its resilience during the pandemic and strong growth potential, the logistics sector overtook the office sector as the most popular asset type among respondents to CBRE’s 2021 Japan Investor Intentions Survey. While the office sector reclaimed top spot in 2022, purchasing demand for logistics assets has remained upbeat this year, with solid investor appetite fuelling a large number of new developments.

Against this backdrop, new supply of Large Multi-Tenant (LMT) logistics facilities in the Greater Tokyo area is projected to rise to record highs in each year from 2021 to 2023. The significant new supply pipeline is anticipated to push vacancy rates up further by the end of 2023. Rising vacancy, together with declining pre-leasing rates for logistics facilities currently under development, has raised concerns that tenant demand may be weakening.

By analysing pre-leasing trends and the factors which underpin them, this report assesses whether declining pre-leasing rates in fact indicate weakening demand.