- Overall performance in the Greater Tokyo office market grows in tandem with the prime office market of the C5W, though at a more moderate pace.
- Strong demand for offices in Greater Tokyo has brought steady growth in the market due to greater affordability options among a very large tenant pool.
- Net migration of the working age population in Greater Tokyo remains favourable with all prefectures seeing positive net figures since post pandemic. Chiba observed the greatest net inflow of residents with an annual increase of 29% in 2024.
- In Q2/2025, average rents for large-scale offices in Tokyo 23W rose 5.0% year-on-year (YoY) to JPY27,300 per tsubo. Vacancy rates decreased to 3.0%, down 1.5 percentage points (ppts) YoY, indicating strong demand.
- Average rents in Yokohama City rose 4.4%YoY to JPY17,000 per tsubo while vacancy tightened 2.7ppts YoY to 6.3%. Meanwhile, in Kawasaki City, average rents increased by 3.6% YoY to JPY16,700 per tsubo while vacancy decreased by 1.4ppts YoY to 4.7%.
- Average rents in Saitama City (Omiya) rose 10.7% YoY to JPY22,400 per tsubo while vacancy rates tightened by 1.0ppts YoY to 1.0%. The strong demand in the market may accelerate with limited new supply.
- Average rents in Chiba City/Funabashi City rose 1.9% YoY to JPY13,000 per tsubo, reaching an all-time high while vacancies increased 4.4ppts YoY to 12.3%.
- Old buildings located close to major stations command competitive rents compared to newer buildings in the same area, especially if they have undergone renovations. Many old buildings are owned by individuals with limited resources, suggesting value-add opportunities for institutional investors.
Steady growth observed in Greater Tokyo office market
The office market across the Greater Tokyo area maintained steady growth and demonstrated resilience even during the pandemic, albeit at a more moderate growth compared to the Tokyo C5W. A handful of big-ticket transactions were observed across the different submarkets. More affordable rents in these areas translate to a strong demand especially amongst SMEs, resulting in low vacancy rates and modest growth in average rents. Value-added opportunities have been emerging in older assets in well-located areas, especially those owned by ageing landlords looking to exit. Elevated construction costs limit future supply, which guarantees rental growth for well-maintained stocks with modern amenities.
Savills Research & Consultancy