Japan ViewPoint - Shinsaibashi_A Tale of Two High Streets Jan 2023

In the most recent quarter, Q3 2022, the vacancy rate in Mido-suji fell by 0.3 pp q-o-q to 0.0%, meaning there are currently no vacancies at all available for immediate occupancy. Rents recorded a 20% q-o-q jump to JPY 300,000, the highest level since CBRE surveys began. Meanwhile, the vacancy rate in Shinsaibashi-suji was 19.8% in Q3 2022, marking the second consecutive quarter in which the vacancy rate has declined, suggesting that recovery may be on the horizon. Although Shinsaibashi-suji rents declined 14.3% q-o-q in Q3 2022, CBRE expected rents in Shinsaibashi-suji begin to rise, and there are two key prerequisites to recover. The first is a resurgence in the number of domestic consumers visiting the area, who contribute significantly to tenants’ sales figures. Foot traffic in the Shinsaibashi-suji shopping district is already on the rise.  The second prerequisite is the return of inbound tourist demand, which was the key driving force behind store space demand and inflationary pressure on rent prior to the pandemic. 

In Mido-suji, luxury brands remain keen to establish new stores, and rents are likely to rise further in 2023. Any retailers wishing to open a new store on Mido-suji should therefore make their interest and intentions very clear to building owners, and be prepared for a potentially long period of negotiation. In Shinsaibashi-suji, as both domestic consumers and foreign tourists are beginning to return to the area, CBRE projects rent levels to bottom out in H1 2023, and to begin to rise from H1 2024. For retailers looking to open a new store on Shinsaibashi-suji, now is the opportune moment to do so.