Vacancy in the C5W tightened further and rents continued to push higher, though the pace of growth was more modest in Q3.
- Demand for Grade A stock in the Tokyo central five wards (C5W) remains strong. Average vacancy continues to push towards zero, having declined for nine consecutive quarters, and average rents are still trending upwards, albeit more slowly.
- Average passing rents for Grade A office space in the C5W grew to JPY36,386 per tsubo1 per month, representing a gain of 0.8% quarter-on-quarter (QoQ) and 6.7% year-on-year (YoY).
- The average Grade A offi ce vacancy rate in the C5W hit 0.2% in Q3/2019, dipping by 0.1 percentage points (ppts) QoQ and by 0.4ppts YoY.
- Average passing rents for large-scale Grade B office space rose to JPY27,904 per tsubo per month, growing by 1.0% QoQ and 7.0% YoY.
- The average large-scale Grade B office vacancy rate stands at 0.3%, falling 0.1ppts QoQ and 0.2ppts YoY.
- WeWork’s ill-fated IPO has brought about increased caution towards co-working, though the subsector’s prospects in Japan appear more stable than in other markets.