- Supply volumes in recent years have affected submarket performances during the pandemic, especially in Minato and Chuo.
- While the supply wave in 2023 is a concern for some submarkets, market fundamentals are expected to gradually recover, supported by improving economic conditions.
- Shinjuku has been slow regarding new developments, but now has several major redevelopment plans in the pipeline. Meanwhile, Shibuya's multiple development plans will transform the district.
- In the long term, continuous redevelopment could be an increasingly important differentiator among submarkets as workers may need stronger incentives to commute to the office.
- Pre-leasing for major projects slated to open in 2023 is picking up.
- Vacancy rates may edge up through 2022 and 2023 as more new offices open, but rents are expected to stabilise as many prime offices are reasonably priced now.
- Demand for satellite offices is expected to grow as telework becomes an essential part of office strategies, creating new office demand.
Total office demand remains stable
The Tokyo office market remains stable, although submarkets that have had large amounts of supply have shown signs of weakness during the pandemic. Market fundamentals are gradually improving, and this has alleviated some concerns over the supply wave in 2023. In general, quality offices at the right price remain sought after. While hybrid work styles have transformed some office needs, total office demand appears stable.
Savills Research & Consultancy