Tokyo overall industrial vacancy rate rises for the first time in two quarters | Real Estate Asia
, Japan

Tokyo overall industrial vacancy rate rises for the first time in two quarters

Vacancy grew by 30bps to 7.6% in Q3.

New industrial supply in Tokyo totalled 504,000 sqm in 3Q23, increasing total stock by 3% q-o-q and 19% y-o-y. According to JLL, five facilities, including Tokyo Ryutsu Center A Building (GFA 156,000 sqm) in the Bay Area, and Goodman Joso (GFA 173,000) and CBRE IM Chibakita 4 (GFA 65,000 sqm) in the Inland area, entered the market. 

The vacancy rate in Greater Tokyo stood at 7.6% for 3Q23, increasing 30 bps q-o-q and 260 bps y-o-y. The vacancy rate in the Bay Area rose to 8.9%, increasing 170 bps q-o-q, while Tokyo Inland fell to 7.1%, decreasing 30 bps q-o-q.

Here’s more from JLL:

Economic indicators for the logistics sector were uneven entering 3Q23. In August, the industrial production index remained flat m-o-m. The value of exports increased for the second consecutive month, and the value of imports decreased for the fifth consecutive month, reflecting the sluggish global economy weighing on capital goods demand.

Strong demand from 3PLs and online retailers, coupled with new supply, saw strong net absorption of 405,000 sqm in 3Q23. For 1Q–3Q23, the figure was more than 1,820,000 sqm.

Rent growth accelerates in Tokyo Bay

Gross rents in Greater Tokyo averaged JPY 4,579 per tsubo, per month, in 3Q23, increasing 0.8% q-o-q and 1.0% y-o-y. Rents in the Bay Area increased 2.1% q-o-q, while remaining flat q-o-q in the Inland area, reflecting new completions in the Bay Area with relatively high rents.

Capital values in Greater Tokyo increased 0.8% q-o-q and 3.3% y-o-y in 3Q23, reflecting stable cap rates and rent growth. A notable sales transaction involved Mitsui Fudosan Logistics Park acquiring MFLP Shinkiba 1 for JPY 5.9 billion. 

Outlook: Rents to remain stable with further cap rate compression

Oxford Economics forecasts industrial production to rise by 3.4% in 2023 and 5.6% in 2024, exports to rise by 0.6% in 2023 and 0.5% in 2024, and imports to fall by 1.4% in 2023 and rise by 1.7% in 2024. Downside risks include a decline in exports due to the global economic slowdown and concerns of deterioration of the domestic economy due to rising raw material prices. 

Amid sustained strong demand, overall rents are expected to grow moderately; however, given the record volume of supply, rents are likely to be under downward pressure in some Inland areas. Capital values are expected to grow as cap rates may compress further amid continued investor interest.

Note: Tokyo Logistics & Industrial refers to the Greater Tokyo prime logistics market.


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