- A strong corporate performance in 2023 and the expedited return to offices by workers has driven demand for office space. Tenants are in a favourable negotiating position, and have been actively consolidating offices and expanding their footprints.
- 2023 saw a large amount of new supply delivered to the market, especially in the Toranomon & Roppongi, and Shibuya submarkets. The strong appetite for modern office space has aided its absorption with limited issues.
- New supply in 2024 will be relatively moderate. Overall, leasing demand has been strong and pre-leasing activity has proceeded smoothly for a majority of incoming properties. As such, there are few concerns regarding the stability of the market in 2024.
- In 2025, the Takanawa submarket will emerge as a competitive office market with the completion of TAKANAWA GATEWAY CITY. Mixed-use amenities and transport access will be major draws for tenants, and some large tenants have already been secured.
- New supply in 2026 and 2027 will be moderate, with a handful of large mixed-use projects in the Shibaura & Hamamatsucho, and Nihonbashi & Yaesu submarkets, which have already received firm interest from the market.
- The Marunouchi & Otemachi submarket will welcome the iconic Torch Tower in 2028, which will be developed as part of the large, mixed-use Tokyo Torch project, transforming the northern edge of Tokyo Station.
- Mixed-use developments appear to have become the standard for larger scale projects, with developers working to integrate these projects with the surrounding environment and communities.
Moderate supply in 2024 to enable further improvements in rents and occupancy levels
Office leasing demand has strengthened as Japan corporations have started to expand business operations. Strong corporate performance and growing rates of office attendance have improved the office market outlook, with the notable influx of office supply in 2023 having been absorbed with few issues. Overall, new supply in 2024 will be moderate, which should allow the market some breathing room to absorb existing vacant space, as well as providing a platform for growth.
Savills Research & Consultancy