• Tokyo’s average 1F retail rents are trending upwards, with strong growth in Omotesando and Shibuya this period.
• Demand is sound nationwide, and rents, which are still 12% below 2008 highs, may still have room to grow.
• Inbound tourism supports retail demand growth, particularly in regional cities, while domestic consumers also demonstrate sound demand.
• Sales at drugstores and sportsrelated shops are firm, while some fast fashion brands appear to be struggling somewhat.
• Retailers who are embracing new technology such as e-commerce can still benefit from occupying physical space.
• A number of large transactions have already been reported in 2019, though the total is currently somewhat lower than at the same time last year. Diverse investor strategies should continue to provide transaction opportunities.

TOKYO SUBMARKET RENTS

According to semi-annual survey by Japan Real Estate Institute (JREI) and BAC Urban Projects, most of Tokyo’s retail submarkets saw rental growth in 2018. Non-1F rents saw steady yearon-year (YoY) growth of 5.7% at the end of 2018, while 1F rents grew more strongly, by 11.8% YoY. The prime retail hubs of Ginza and Omotesando still command the highest 1F rents, but, on average, Omotesando has taken the top spot from Ginza and Shibuya is catching up.