- The pandemic has slowed the Tokyo office market overall, but the impact was felt differently in different submarkets.
- Although multiple forces are at play, building age and accessiblity have largely elucidated different performances among different submarkets.
- At the property level, walkability to stations seems to have influenced property performances during the pandemic as well.
- The market has seen signs of slowing corrections with vacancy rates stabilising and rental decreases moderating.
- The primary cause of market average rents weakening more slowly in recent quarters was a smaller number of properties that were prompted to reduce rents.
- Although we expect rental growth gaining some momentum in 2024 after a supply wave in 2023, a slowdown of the global economy could delay recovery.
- Recovery is likely to be uneven considering how the pandemic has affected different submarkets and properties differently.
- Investor appetite for office assets remains large as indicated by the substantial transactions in recent quarters and the strong investor interest they garnered.
Recovery is underway, albeit gradually and unevenly
While the Tokyo office market as a whole continues to see modest corrections, submarket and property-level performance varies, and the divergence between overperformers and underperformers has become increasingly clear. Going forward, we expect a gradual improvement of overall market conditions, although a slowdown of the global economy could delay recovery.
Savills Research & Consultancy