MARKETVIEW | JAPAN OFFICE | Q1 2023
MARKETVIEW | JAPAN OFFICE | Q1 2023
Take-ups increase with more tenant enquiries nationwide ＋1.3% Forecast* Y-o-Y GDP Growth Q1
5pts -1pts Q-o-Q
BOJ Tankan DI (All Enterprises) Q1
－0.4% Q-o-Q Tokyo Grade A Rent Q1
＋0.6pts Q-o-Q
Tokyo Grade A Vacancy Rate Q1
*JCER Forecast
‒ The All-Grade vacancy rate fell for the second straight quarter in Q1 2023, down 0.1 pp. q-o-q to 4.6%. While most newly completed buildings commenced operations with some vacancies remaining, vacant spaces in existing properties continued to be filled by tenants looking to upgrade or move to better locations. Net absorption reached 78,000 tsubo, the highest single quarter total since Q2 2020. Nonetheless, All-Grade rents fell by 0.3% q-o-q, with asking rents being lowered in buildings with prolonged vacancies.
Osaka: Vacancy rate projected to remain steady until end of year
‒ The All-Grade vacancy rate rose by 0.1 pp. to 3.6% this quarter. Several of the new buildings completed in Q1 2023 came on stream with significant vacancies, but absorption of vacant spaces in existing buildings ensured overall vacancy did not rise substantially. The absence of new supply meant Grade A vacancy fell for the second straight quarter. All-Grade rents declined by 0.2% q-o-q, with rents being lowered in buildings with prolonged vacancies.
Nagoya: Vacancy rates fall across all grades
‒ The All-Grade vacancy rate slipped by 0.2 points q-o-q to 5.5% in Q1 2023, the second consecutive quarter decline. The absorption of vacancies in high-end spaces following lowering of asking rents was the primary factor behind this downward trend. As a result of relocations for the purposes of upgrading, expansion, or locational upgrades, vacancy rates fell across all grades. All-Grade rents fell by 0.2% q-o-q because of properties with relatively large vacancies lowering their asking rents.
Regional cities: Vacancy rates rise in cities with new supply
‒ All-Grade vacancy rates rose q-o-q in five of the 10 cities surveyed by CBRE, falling in the other five. Other than Kobe, all cities which recorded rise in vacancy rate saw new buildings come on stream at less than full occupancy. All-Grade rents fell q-o-q in four of the 10 surveyed cities, remained unchanged in two, and rose in the remaining four. With tenants remaining highly selective, landlords continue to offer rent-free periods or lower asking rents in order to secure new tenants.
1
CBRE RESEARCH
Figure 1: Grade A Average Assumed Achievable Rent
40,000 JPY/tsubo
▶ Forecast
35,000
30,000
25,000
20,000
15,000
Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q1 2024
Tokyo: All-Grade vacancy rate drops for second straight quarter
Tokyo
Osaka
Nagoya
Source: CBRE, Q1 2023
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