Savills

Publication

Tokyo Office Leasing Q2/2023

Article

Contacts & Related Research

Further stability with some challenges ahead

The Tokyo office market has stabilised, but the large volume of incoming supply may threaten this equilibrium.

  • Rental corrections have been mild and indicate that the market is moving towards greater stability in 2023. Meanwhile, vacancy rates remain low overall.
  • Average Grade A office rents in the C5W decreased by 0.5% quarter-on-quarter (QoQ) to JPY32,386 per tsubo per month, falling 1.3% year-on-year (YoY).
  • The average Grade A office vacancy rate in the C5W tightened by 0.4 percentage points (ppts) QoQ and 0.5 ppts YoY to 2.6%.
  • Average large-scale Grade B office rents remained stable over the quarter at JPY24,490 per tsubo per month, translating to a decline of 0.6% YoY.
  • Vacancy rates in the Grade B market tightened slightly by 0.3ppts over the quarter to 3.8%.
  • A large amount of new office supply will enter the market in 2023 and 2025, but office completions will be relatively limited in 2024 and 2026, which should give the market some time to absorb the large supply.

The Tokyo office market has achieved greater stability in the post-pandemic era. Vacancy rates also appear to be approaching the tight levels observed pre-pandemic. The introduction of large office supply may threaten occupancy recovery but pre-leasing has been largely encouraging, and the mixed-use features with ESG specifications should attract tenants and ease some concerns.

Savills Research & Consultancy
Read more