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- In Greater Tokyo, the market has continued to loosen slightly in the face of new supply, increasing by 2.7 percentage points (ppts) year-on-year (YoY) to 7.1%.
- In Greater Osaka, vacancy has moved in a similar direction, increasing by 0.6ppts YoY to 3.0%.
- Rents in Greater Tokyo have recovered to JPY4,620 per tsubo, increasing by 2.2% half-year-on-half-year (HoH) and 2.4% YoY.
- Rents in Greater Osaka rose in tandem by 1.4% HoH to JPY4,240 per tsubo, translating to an annual increase of 0.5%.
- Investment levels in 2023 have surpassed those of 2022 for the logistics sector due to the large number of big-ticket transactions over the year.
- Supply levels are expected to remain high in 2024 and 2025, which is likely to loosen the market further.
- Increased construction costs should also limit upcoming supply, which should further contribute to achieving a supply and demand equilibrium in the mid-term.
- Data centres have been extremely popular amongst investors due to the growth of digital infrastructure in Japan. However, sharpened pricing may cause embedded risks to emerge.
Sound fundamentals but with challenges ahead
The logistics sector continues to perform well overall, but the large new supply over the past year has loosened the market, with vacancy rates rising as some new properties struggle to fill available floors. The industry will face a number of challenges moving forward, including the sustained influx of new supply and labour regulations that may dampen operations. While prime logistics facilities remain fully occupied and even display rental growth, older facilities with outdated specifications in less desirable locations are expected to keep struggling.
Savills Research & Consultancy