• Arisingstockmarketisdeemed tohavestimulateddomestic consumption
• Threebuildingsadded tothedevelopment pipeline inGinzaand Omotesando scheduledforcompletion in2027-2029
• Rentalvaluesandcapitalvaluescontinue togrowalbeitataslowerpace
Salesofluxurygoods atdepartment storesinTokyo remained robustinAprilandMay.Withforeign visitorarrivalscontinuing todecline inthe sameterm, arisingstockmarketisdeemed tohavestimulateddomestic consumption.
Occupier demand fromluxurybrandsremained healthyinQ22026.Notablenew openings included Hunting World specialisinginapparelon Omotesando. Inaddition, F&BSmith&Wollenskyopened onanupper flooronChuo-dori inGinza.
Nonewsupplywasintroduced totheprimeretailmarketofGinzaandOmotesando inTokyo inQ22026.Development projects confirmed inQ2 included theMatsuzawaBuildingNewConstruction (GFA1,400sqm),duein2027,theGinzaTrade BuildingRedevelopment Project (GFA20,000 sqm),duein2029along Chuo-dori, andtheOmotesando IDevelopment Project (GFA1,500sqm), duein2028onOmotesando.
Rents reached JPY112,686per tsubopermonth inQ22026,up3.2%q-o-q and12.9%y-o-y. Growthmoderated slightly.Whilenew store openings byluxurybrandshavelargelyruntheircourse,prime spacescontinue toattractbidderswhentheycome onto themarket.Capital valuesincreased by3.8%q-o-q and12.2%y-o-yinQ2.Rentalgrowthcontinued tounderpin capitalvalueappreciation ascapratesremained stable.However, noactualinvestment transactionswere recorded intheprime retailmarketinTokyo duringthequarter.
Outlook
Intheleasingmarket,thetightsupply-demand balanceisexpected tocontinue onthebackoflimitedsupplyofprime spacessustaining upwardpressureon rentgrowth. However, growthisexpected toslowasdemand fromluxurybrandsappearstohavepeaked. Inthe investment market,capratesareexpected toremain stablefortheforeseeablefuture.Onthisbasis,capitalvaluesareprojected tocontinue increasingmoderately, primarilysupported byrentalgrowth.
Fundamentals
Grossrent JPY112,686per tsubop.m.
Rentgrowth Y-o-Y 12.9%
Stage inrental cycle GrowthSlowing
Note:FinancialindicatorsarefortheprimeretailmarketsofGinzaandOmotesando. DataisonanNLAbasis.RetailsalesgrowthfiguresareforTokyoPrefecture.
LuxuryGoodsSales
Source:JapanDepartmentStoresAssociation
Note:Luxurygoodsrefertoart,jewellery,andprecious metals
