• Strong leasing momentum continued in Q4, with full-year net absorption reaching a record-breaking level
• Total vacancy declined by a further 20 bps to 0.7%, underpinned by robust demand for prime office space
• Rents increased for the eighth consecutive quarter
Net absorption in the Tokyo Grade A office market reached 124,700 sqm, marking a record year. Demand was led by professional services, IT firms, and manufacturing sectors. Notable leasing activity during the quarter included the relocation of the corporate headquarters of a large multinational corporation and the pre-leasing of a large-scale project, scheduled for completion after 2030, by a major domestic company.
One new Grade A office building, Akasaka Trust Tower (Minato Ward; 43 storeys; NLA 105,800 s.m.), entered the market in Q4 2025 with near-full occupancy, accounting for nearly 20% of total completions for the year. Tokyo’s Grade A office vacancy rate averaged 0.7% in Q4 2025, down 20 bps q-o-q and 210 bps y-o-y.
Average monthly gross rents stood at JPY 38,252 per tsubo at the end of Q4 2025, reflecting an increase of 3.3% q-o-q and 9.4% y-o-y. Capital values rose as continued rental growth more than offset a 5 bps increase in capitalisation rates from the previous quarter. Notable transactions included FPG’s acquisition of an additional stake in Kyobashi Trust Tower for JPY 14 billion.
Outlook
According to Oxford Economics’ forecasts as of December 2025, real GDP growth for 2026 was revised upward by 10 bps to 0.7%, while end-2026 CPI projections were raised to 2.0%. With pre-commitment levels for 2026 remaining robust, tenant demand is expected to shift towards new supply that are expected to be completed after 2027. Vacancy levels are likely to remain tight in the near term and rents are forecasted to rise by a further 9% next year.
Fundamentals
Note: Financial and physical indicators are for the 5 Kus Grade A office market. Data is on an NLA basis.
Historical supply and demand trends
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