Tokyo rents and vacancies rise | Real Estate Asia
, Japan

Tokyo rents and vacancies rise

Tokyo office rents rose both YoY and MoM but vacancy increased for the fifth straight month to 2.77%. By area, Minato saw the largest vacancy increase (to 3.52% from 2.33%) and Chiyoda saw the smallest increase (from 1.39% to 1.93%). Inside we provide additional details by area and comment on investment implications (for Tokyu Fudosan, Mitsubishi Estate, and Sumitomo Realty).

According to the Miki Shoji office survey of 2,604 offices (28 new, 2,576 existing), Tokyo average office vacancy increased from 1.97% in June to 2.77% in July. New building vacancy decreased from 2.51% to 2.13% (improved) and existing building vacancy increased from 1.95% to 2.79% (worsened).

Tokyo average rents of ¥23,014/tsubo were up 6.23% YoY and 0.59% MoM. New building rents were up 7.75% YoY and 0.26% MoM and existing building rents were up 6.49% YoY and 0.75% MoM.

The vacancy continues to rise but rent growth remains firm at 6.2%. Vacancy is a 12-18 month leading indicator of rents, so we should begin to expect rent growth rates to decline and eventually go negative by 2021.

Jefferies Equity Research notes that they are concerned over the potential for weaker vacancy for some time. “As Japanese corporate earnings deteriorate from COVID it is reasonable to expect vacancy to increase. The market hopes that earnings eventually recover, reversing the downward pressure. We share that expectation.”

“We argue that there has been consolidation of offices among the bigger players, who have leasing and balance sheet advantages. We think that, despite weaker overall market trends, there may be an ongoing process of continued consolidation, with larger players taking more market share. It can be argued that despite general weaker Tokyo office trends that vacancy increases may not be as severe at Mitsui Fudosan or Mitsubishi Estate for example.”

Join Real Estate Asia community
Since you're here...

...there are many ways you can work with us to advertise your company and connect to your customers. Our team can help you dight and create an advertising campaign, in print and digital, on this website and in print magazine.

We can also organize a real life or digital event for you and find thought leader speakers as well as industry leaders, who could be your potential partners, to join the event. We also run some awards programmes which give you an opportunity to be recognized for your achievements during the year and you can join this as a participant or a sponsor.

Let us help you drive your business forward with a good partnership!

Exclusives

How Metland Indonesia deals with weaker residential purchasing power
The real estate firm continues to expand with residences that are attractive to consumers because of pricing, the ‘growing house’ concept, and sustainable features.