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Tokyo Office Leasing Q3/2023

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Stability with widening gaps in performance

The Tokyo office market continues on a positive trajectory, but older offices with poor accessibility may continue to struggle.

  • Rental changes were nominal in Q3/2023 and the outlook appears cautiously optimistic overall. Vacancy rates generally remain low.
  • Average Grade A office rents in the C5W increased by 0.1% quarter-on-quarter (QoQ) to JPY32,410 per tsubo per month, while decreasing by 1.2% year-on-year (YoY).
  • Grade A office vacancy in the C5W softened by 0.8 percentage points (ppts) QoQ, but tightened by 0.7ppts YoY to 3.4%.
  • Average large-scale Grade B office rents contracted marginally at 0.3% over the quarter to JPY24,424 per tsubo per month, translating to a decline of 0.8% YoY.
  • Vacancy rates in the Grade B market loosened slightly by 0.2ppts over the quarter to 4.0%.
  • Tenant relocations have picked up in earnest. Many office consolidations have taken place, with prospective tenants appearing to favour modern offices.
  • Older and poorly located offices have struggled since the pandemic, and landlords are increasingly resorting to new initiatives.

The Tokyo office market looks to remain largely stable, with some marginal quarterly rental growth. Vacancy rates remain low and stable overall, and a majority of new major developments have been absorbed with limited issues. That said, bifurcation based on office age and location persists in the market, and large-scale new supply may threaten the current stability.”

Savills Research & Consultancy
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