Rents have reached high levels following fervent growth in the C5W, especially in the Grade A market, whilst vacancy remains air-tight.

• Against a backdrop of limited availability, competition for spacein the Grade A market was fierce in Q4/2019. Rents over both the quarter and year saw the greatest change since 2014, while vacancy remained at rock bottom.
• Average passing rents for Grade A office space in the C5W grew 2.7% quarter-on-quarter (QoQ) and 8.0% year-on-year (YoY) to JPY37,373 per tsubo1 per month.
• The average Grade A office vacancy rate in the C5W remained at around 0.2% over the quarter in Q4/2019, while rates contracted 0.3ppts YoY.
• Average passing rents for large-scale Grade B office space rose to JPY28,178 per tsubo per month, growing by 1.0% QoQ and 6.8% YoY.
• The average large-scale Grade B office vacancy rate stands at 0.1% following a decline of 0.1ppts QoQ and 0.5ppts YoY.
• Shibuya has reinvented itself as the go-to location for technology firms specialising in internet-related services, and rents in the office sector have responded accordingly.
• Fundamentals in the office market remain strong. With most of the supply expected over the shorter term close to or already completed, rent growth should persist for now, albeit at a flat to moderate level