JRMV Q2 2022

MarketView | JAPAN RETAIL | Q2 2022

MARKETVIEW | JAPAN RETAIL | Q2 2022

Ginza high-street vacancy rates fell by 1.4pp to 3.1% q-o-q, the largest fall since the COVID-19 spread + 2.8% Retail Sales*

y-o-y Apr. to Jun.

+ 26.1% Apr. to Jun. y-o-y

Department store sales**

ｰ 2.0pts m-o-m Consumer confidence index*** Jun. 2022

ｰ 1.4pts q-o-q

±0.0%

q-o-q

Ginza High Street Rent **** Q2

Ginza High Street Vacancy Rate **** Q2

Source: *Ministry of Economy, Trade and Industry **Japan Department Stores Association ***Japanese Cabinet Office ****CBRE

━ Nagoya : Nagoya’s Sakae high street vacancy rate for Q2 2022 fell 0.8pp from the previous quarter to 0.0%.

However, there are several properties which are being offered, some of which are relatively large size. Sakae high streets rents fell by 0.7% q-o-q to JPY 70,000 per tsubo. Although there is a demand for shop openings from a wide range of retail categories, the retailers are seeking rents below the current market levels.

9% 6%

JPY/tsubo

500,000

心斎橋

京都

神戸

栄

天神

Tenjin

渋谷

Sakae

新宿

Kobe

表参道・原宿

Kyoto

銀座

Shibuya

0%

Shinsaibashi

3% Shinjuku

confirmed at several properties in the Shinsaibashi-suji shopping district, and new vacancies were limited. High street rents in the Shinsaibashi district remained unchanged from the previous quarter at JPY 142,000. As in the previous quarter, the Midosuji high street continued to attract demands from luxury brands for shop openings. However, the demand was not strong enough to drive up rents.

12%

Omotesando Harajuku

━ Osaka : Osaka’s Shinsaibashi high street vacancy rate fell by 1.4 pp q-o-q to 13.1% in Q2 2022. Tenants were

15%

Ginza

━ Tokyo : The high street vacancy rate in Tokyo’s Ginza area fell by 1.4 pp q-o-q to 3.1% in Q2 2022. Relatively large vacancies were filled during the quarter, and new vacancies were limited. Ginza high street rents remained unchanged for the third straight quarter at JPY 241,500 per tsubo per month. In addition to demand from luxury brand operators which do not have a presence in the Ginza area, the period saw other retailers looking to relocate from existing stores within the district.

Figure 1: High street vacancy (upper graph) & prime rent/high street rents (lower graph) in Q2 2022

400,000 300,000 200,000 100,000 0

Prime Rent

High Street Rent

Source: CBRE, Q2 2022

1

CBRE RESEARCH

© 2022 CBRE, INC.

MarketView | JAPAN RETAIL | Q2 2022

Figure 3: Retail Sales & Department Store Sales

Economy

20 y-o-y %

Q2 Department store sales increased double-digit y-o-y

y-o-y %

200

15

150

10

100

partly as a result of recovery in consumer confidence due to increased opportunities to go out.

5

50

High-end spending was brisk, particularly among high net-worth customers, and sales of summer

0

0

-5

-50

-10

-100

National department store sales for Q2 2022 increased 26.1% y-o-y. This was partly due to low base last year, which was under business restrictions due to the declaration of a state of emergency, and

clothing and UV-care products were strong in June.

On the other hand, the consumer confidence index for June 2022 worsened for the first time in three months to 32.1, down 2.0 points m-o-m. The decline in the index was due to a series of price hikes for daily necessities and the fact that many consumers expected prices to continue to rise.

-15

-150 4 5 6 7 8 9 1011 12 1 2 3 4 5 6 7 8 9 1011 12 1 2 3 4 5 6 7 8 9 1011 12 1 2 3 4 5 6 2019

2020

Department Store Sales (RHS)

2021

2022

Retail Sales

Source: Datastream, Japan Department Stores Association, METI, CBRE, Q2 2022.

Figure 2: Consumer Confidence Index

Figure 4: Number of Inbound Tourists in Japan

45

35 million 30

31.2

40

28.7

25 24

20

35

31.9

19.7 15 30

13.4

10 5

25

8.6 6.2

8.4

10.4 4.1

0 2010

20

2011

2012

2013 2014 2015 2016

1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6

2019

Source: Datastream, CAO, CBRE, Q2 2022.

2

CBRE RESEARCH

2020

2021

2022

2017

0.2

0.1

0.5

2018 2019 2020 2021 Apr to Apr to Jun Jun 2021 2022

Source: Japan National Tourism Organization (JNTO), CBRE, Q2 2022.

© 2022 CBRE, INC.

MarketView | JAPAN RETAIL | Q2 2022

High street rents forecast to rise by 0.6% in Q4 2022 The high street vacancy rate for Q2 2022 fell by 1.4 pp q-o-q to 3.1%. Tenants were found for properties with relatively large floor space, and new vacancies were limited.

Ginza high street rents remained unchanged for the third straight quarter at JPY 241,500. CBRE forecasts rents to remain at this level until Q3 2022, before a projected rise of 0.6% in Q4 2022.

While available high street properties are attracting more interest than they did in the previous quarter, negotiations are prolonged, which is delaying the confirmation of new tenants. As a result, CBRE has pushed back its original projection of the timing of when the Ginza high street rents would start rising, from Q3 2022 to Q4 2022. We expect rents to rise by 3.1% over the next two years, at which point the rent will have recovered to 3.5% below the level recorded in Q4 2019, just before the advent of the pandemic.

Although a newly-developed property in the high street area of Chuo-dori attracted interest from multiple luxury brands in Q2 2022, the fact that it is being offered as a multi-level unit is limiting interest, with most retailers considering tenders for just the ground floor or for the bottom two floors only. Another available property on Chuo-dori has been leased by a recycled goods store to function as its flagship location. While the contracted rent was slightly below the asking rent, it was at the going market rate. Elsewhere, another recycled goods store confirmed that it will relocate to new premises in the high street area of Miyuki-dori. At the same time, larger properties or those asking rates above market averages are continuing to struggle to attract interest. While the property owners are asking for the same rents as what their previous tenants had paid prior to the pandemic, retailers are looking to pay significantly less.

Multiple overseas brands with no street-level presence in the Ginza area were seen to be searching for opportunities to open new stores this quarter. In addition to luxury goods brands, these include jewelry, outdoor and sporting goods, and fashion brands. Some have expressed an interest in securing a location before inbound tourist numbers pick up once again. Several retailers are also looking for new premises as a result of being asked to leave their current locations which are planning a redevelopment.

Several existing tenants in secondary areas who signed their contracts prior to the pandemic are now looking to return the upper-level parts of their units. Others, who were unable to reach satisfactory terms with their landlords during contract renewal negotiations, are beginning to look elsewhere. Some available properties in secondary areas are failing to attract interest as a result of their inefficient use of floor space. While others have attracted interest from multiple retailers, negotiations are progressing slowly.

3

CBRE RESEARCH

Figure 5: High street vacancy rate & high street rent in Ginza (JPY/tsubo)

6%

245,000

5%

244,000 243,000

4%

242,000 3% 241,000 2%

240,000

1%

239,000

0%

238,000 Q2 2021 High Street Rent Vacancy Rate

Q3 2021

Q4 2021

Q1 2022

Q2 2022

RateRent HighVacancy Street

Source: CBRE, Q2 2022.

Figure 6: Ginza high street rent (JPY/tsubo)

270,000

▶ Forecast

265,000 260,000 255,000 250,000 245,000 240,000 235,000 230,000

Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q1 2024 Q2 2024

Tokyo: Ginza

Source: CBRE, Q2 2022.

© 2022 CBRE, INC.

MarketView | JAPAN RETAIL | Q2 2022

Tokyo: Omotesando/Harajuku

Tokyo: Shinjuku

Some luxury brands prepared to consider paying rents above market rates

Larger properties attract retailer demand on the condition of reducing floor area

The high street vacancy rate for Q2 2022 fell by 1.0 pp q-o-q to 6.2%, with a relatively large property confirming a new tenant.

The high street vacancy rate for Q2 2022 rose by 2.2 pp q-o-q to 10.2%, with new vacancy in relatively large spaces.

During the quarter, a potentially available unit on the Omotesando high street saw interest from multiple retailers, including luxury brands, with some retailers expressing an interest in paying above market rates. Luxury brand demand is concentrated on Omotesando. Other retailers are considering establishing permanent stores in the area following the success of their pop-up operations. As a result, high street rents for Omotesando and Harajuku rose by 3.4% q-o-q to JPY 183,800 this quarter. Several new store openings were confirmed in properties on the Meiji-dori high street, including an overseas brand opening its first Japanese store. At the same time, however, several available properties have now stood vacant for some time. Areas heavily populated by domestic brands, in particular, are struggling to attract retailer demand.

Shinjuku high street rents remained unchanged for the second straight quarter at JPY 170,000. One available property in the high street area of Shinjuku-dori confirmed a high-end wristwatch brand as its new tenant, while retailer interest was observed for another available property on the same street.

Demand is centered on Shinjuku-dori from a wide variety of retailers in industries such as luxury goods and outdoor and sporting goods, with interest seen from multiple retailers in even relatively large properties. In several cases, however, retailers are negotiating with landlords to reduce floor space or restrict levels in an effort to lower the total rent burden. Some current high street tenants, while desiring to extend their contracts, have requested rents to be lowered as a result of flagging sales.

An available property in a secondary area drew interest from an overseas e-commerce brand this quarter, while another secondary area property confirmed as its new tenant a retailer relocating from Ginza, wishing to switch its advertising focus to a younger demographic.

Figure 7: High street vacancy rate & high street rent in Omotesando/Harajuku (JPY/tsubo)

184,000

8%

182,000

7%

180,000

6%

178,000

5%

176,000

4%

174,000

3%

172,000

2%

170,000

1%

168,000 166,000 Q2 2021

Q3 2021

Street Rent Vacancy High Rate

Source: CBRE, Q2 2022.

4

Figure 8: High street vacancy rate & high street rent in Shinjuku (JPY/tsubo)

9%

0%

CBRE RESEARCH

Q4 2021

Vacancy Rate High Street Rent

Q1 2022

Q2 2022

While an available property in a secondary area has attracted interest from fashion and food retailers, its above-market asking rent and a rather narrow configuration have prevented it from securing a tenant.

184,000

12%

182,000

10%

180,000 178,000

8%

176,000

6%

174,000 172,000

4%

170,000

2%

168,000 166,000

0% Q2 2021 Vacancy RateRent High Street

Q3 2021

Q4 2021

Q1 2022

Q2 2022

HighVacancy StreetRate Rent

Source: CBRE, Q2 2022.

© 2022 CBRE, INC.

MarketView | JAPAN RETAIL | Q2 2022

Tokyo: Shibuya

Figure 10: Number of new store openings by location

50

Luxury brand secures its first Shibuya area store The high street vacancy rate for Q2 2022 fell by 3.2 pp q-o-q to 9.1%, with tenants secures in several available properties of approximately 50 tsubo.

Shibuya high street rents remained unchanged for the third straight quarter at JPY 126,800 in Q2 2022.

An available property on the Koen-dori high street secured a luxury brand as its new tenant, with the store representing the brand’s first street-level presence in the Shibuya area. The store is intended to target Gen Z consumers and other younger demographics. Several other luxury goods and fashion brand retailers are also searching for opportunities to open new stores in the Shibuya area which can be used as marketing tools to attract younger consumers. An available unit in the high street area of Center-gai, however, is proving hard to lease out due to its narrow configuration.

A large available property of over 200 tsubo in the secondary area of Jinnan attracted the interest of an overseas retailer this quarter. Although another long-term vacancy in a secondary area has garnered retailer attention, there remains a significant gap between the asking rent and what any potential tenant is willing to pay. As a result, some time is likely to be required before a contract is signed.

30 20 10 0

Q1

134,000

60

12%

132,000

50

10%

130,000

40

8%

128,000

30

6%

126,000

20

4%

124,000

10

2%

122,000

0

0%

120,000 Q3 2021

Street Rent Vacancy High Rate

Source: CBRE, Q2 2022.

CBRE RESEARCH

Q4 2021

Vacancy Rate High Street Rent

Q1 2022

Q2

Q3

2021 2022 Omotesando

2021 2022 Harajuku

2021 2022 Shinjuku

2021 2022 Shibuya

Q1 2022

Q2 2022

Q4

Source: CBRE Research, company press releases and media reports CBRE, Q2 2022.

14%

Q2 2021

2021 2022 Ginza

Figure 11: Number of new store openings by sector*

Figure 9: High street vacancy rate & high street rent in Shibuya (JPY/tsubo)

5

40

Q2 2022

Q2 2021 Fashion Drug Store

Q3 2021 Luxury Furniture&Goods

Q4 2021 F&B Showroom

Outdoors&Sports Reuse

Health&Beauty Other

*The data covers five areas, including Ginza, Omotesando, Harajuku, Shinjuku, and Shibuya Source: CBRE Research, company press releases and media reports CBRE, Q2 2022.

© 2022 CBRE, INC.

MarketView | JAPAN RETAIL | Q2 2022

Figure 12: Key Store Openings in Tokyo Q2 2022

Tenant

Area

Street Name

Size* (approx tsubo)

GINZA

Chuo-dori

50

Ikedaya Building

JIMMY CHOO

OMOTESANDO/HARAJUKU

Omotesando

N/A

Omotesando Chiyoda Building

BREITLING

OMOTESANDO/HARAJUKU

Omotesando

35

Juchheim Harajuku Building

TAG Heuer

OMOTESANDO/HARAJUKU

Omotesando

20

Omotesando Hills

On

OMOTESANDO/HARAJUKU

Cat street

90

Harajuku 250

Alpen

SHINJUKU

Shinjuku-dori

3,720

tutuanna

SHIBUYA

Basketball street

60

Center 244

Crazy Raccoon

SHIBUYA

N/A

N/A

Frame Jinnan-zaka

AKRIS

Building Name

Yunika Building

*Information in the above table are limited to those available on press releases, media reports, and other public domain. CBRE estimates are not included.

Source: CBRE, company press releases and media reports, Q2 2022.

Figure 13: Upcoming Retail Developments in Tokyo (GFA of 1,000 tsubo or more)

Name (Tentative) Minami Aoyama 3 Chome Project TOKYU Kabukicho Tower (Tentative) Jingumae 6-chome Redevelopment (Tentative) Shibuya-ku Dogenzaka 2 Chome Development Plan Seiho Building Development Plan SHIBUYA SCRAMBLE SQUARE (Second term)

Area

GFA (approx tsubo)

OMOTESANDO/HARAJUKU

4,500

SHINJUKU

26,500

OMOTESANDO/HARAJUKU

Developer

Open

Mitsubishi Estate

Feb. 2023

Tokyu Corporation, Tokyu Recreation

Apr. 2023

6,000

Tokyu Land Corporation

Aug. 2023

SHIBUYA

12,700

Pan Pacific International Holdings Corporation

Sep. 2023

OMOTESANDO/HARAJUKU

5,300

Seiho Building, Urban Renaissance Agency

Feb. 2024

SHIBUYA

29,000

Tokyu Corporation

Mar. 2028

Note: Floor area may contain non-retail spaces.

Source: CBRE, company press releases and media report, Q2 2022.

6

CBRE RESEARCH

© 2022 CBRE, INC.

MarketView | JAPAN RETAIL | Q2 2022

Kansai: Shinsaibashi Luxury demand on Mido-suji; pop-up store demand in shopping district The high street vacancy rate for Q2 2022 fell by 1.4 pp q-o-q to 13.1%. Tenants were confirmed at several properties in the Shinsaibashi-suji shopping district, and new vacancies were limited.

Shinsaibashi high street rents remained unchanged from the previous quarter at JPY 142,000. On the Mido-suji high street, a property, whose tenant is likely to leave, has attracted interest from multiple luxury brands. As was the case in the previous quarter, appetite to open new stores in the area is extremely high among luxury brands, especially those without a current street-level presence in Shinsaibashi and those wishing to improve their current store location. With few vacancies available on Mido-suji, competition among retailers is likely to drive up rents. The Shinsaibashi-suji shopping district is seeing demand for pop-up stores from a range of industries including apparel, food retail, and outdoor and sporting goods. At the same time, however, vacancies continue to increase as a result of store closures, in some cases involving popular tenants.

Furthermore, a number of landlords which have been marketing vacant units for lease for some time now are seeing retailer interest dwindle, leading some owners to consider lowering their asking rents.

Figure 14: High street vacancy rate & high street rent in Shinsaibashi (JPY/tsubo)

16%

144,000

14%

143,000

12%

142,000

10%

141,000

8%

140,000

6%

139,000

4%

138,000

2%

137,000

In secondary areas, an available property on Mido-suji north of Nagahori-dori confirmed a wristwatch brand as its new tenant in Q2 2022, at the asking rent which was at par with the current market level. Another available property on Nagahori-dori is under consideration by a food retailer planning to open a store in anticipation of the recovery of inbound tourist demand. Elsewhere, a retailer with an existing outlet in America-mura, which was planning to relocate to new premises in the Shinsaibashi-suji shopping district, has changed its strategy and has elected to renew its current contract instead. The retailer in question appears to have been concerned by the increasing vacancy in the Shinsaibashi-suji shopping district, which has made the area somewhat less appealing to consumers as a convenient shopping destination.

Kansai: Umeda Prime rents fall due to limited number of new openings in the high street Umeda high street rents fell by 0.5% q-o-q to JPY 94,500 per tsubo this quarter, primarily as a result of flagging demand for new openings from retailers able to afford high-end rents. As a result, the Umeda area was the only one of the 10 areas nationwide surveyed by CBRE in which prime rents fell over the quarter. As was the case in Q1 2022, new high street store openings were very limited in number. While demand was seen from large-scale retailers and showroom operators, very few contracts were signed due to the fact that prospective tenants are only prepared to pay 20 to 30% less than what landlords are asking. Some retailers planning to open street-level stores in the Umeda area have switched their focus to other areas, or to upper floors in shopping mall complexes.

During the quarter, a digital telecommunications brand opened its first Kansai region store in a newly completed building in the secondary area of Chayamachi. The brand in question has also opened a pop-up store on the same site to promote the goods sold through its e-commerce channels. Above street level, demand continued to be seen for store space from cosmetic clinics and beauty salons, while demand from this sector was also seen for available properties south of JR Osaka Station. As a whole, demand for properties in secondary areas was slightly up from the previous quarter.

136,000

0% Q2 2021

Q3 2021

Vacancy Rate

High Street Rent

Q4 2021

Q1 2022

Q2 2022

High Street Rent Vacancy Rate

Source: CBRE, Q2 2022.

7

CBRE RESEARCH

© 2022 CBRE, INC.

MarketView | JAPAN RETAIL | Q2 2022

Kansai: Kyoto

Kansai: Kobe

New openings and demand for stores targeting domestic consumers

Multiple new store openings seen around department stores

The high street vacancy rate for Q2 2022 fell by 0.7 pp q-o-q to 7.3%, mainly due to the opening of several new stores and some properties being taken out from the basket due to reconstruction.

The high street vacancy rate for Q2 2022 rose by 0.5 pp q-o-q to 7.6%, as a result of several vacancies in Sannomiya Center-gai.

During the quarter, a new general goods store opened on the Shijo-dori high street, while a shop specializing in purchase of high-end brand goods (to be sold in other outlets) secured another available property on Shijo-dori. Both stores represent the retailer’s first entry into the Kyoto market, while contracted rents appear to be at or slightly below the asking rents. New openings and demand for stores from retailers targeting domestic consumers have been widely observed. In contrast, rents in areas which has concentration of stores targeting foreign tourists continued to decline. As a result, Kyoto high street rents for the quarter fell by 0.8% q-o-q to JPY 65,000 per tsubo.

In Q2 2022, premises were secured by a fashion brand for the launch of a new store in the Sannomiya Center-gai high street, while a pet shop chain, having performed strongly during the pandemic, confirmed the opening of a new store. Following the completion of the refurbishment of the Kobe Hankyu department store on Flower Road, multiple luxury brands have opened stores in the property. Also this quarter in the Former Foreign Settlement area, the Daimaru department store announced that it will lease the space directly to the east of its Kobe store. The street-level unit has already confirmed a new retail tenant, while a few popular luxury brands have relocated to the surrounding area. However, the area some distance from the department stores is struggling to attract retailer interest. As a result, Kobe high street rents fell by 1.0% to JPY 72,300.

Also this quarter, a fashion brand opened a new store in the secondary area of Shinkyogoku-dori after relocating from a high street area. With its new premises featuring more floor space than before, it has been able to establish an event space within the unit. Relocations of this type from the high street to secondary areas such as Sanjo-dori, Shinkyogoku or Teramachi have been widely observed since the advent of the pandemic. Lower rent levels and the fact that Gen Z consumers tend to frequent these areas are seen as the primary reasons for such moves.

Figure 15: High street vacancy rate & high street rent in Kyoto (JPY/tsubo)

Figure 16: High street vacancy rate & high street rent in Kobe (JPY/tsubo)

9%

80,000

9%

80,000

8%

78,000

8%

78,000

7%

76,000

7%

76,000

6%

74,000

6%

74,000

5%

72,000

5%

72,000

4%

70,000

4%

70,000

3%

68,000

3%

68,000

2%

66,000

2%

66,000

1%

64,000

1%

64,000

0%

62,000

0%

Q2 2021 Vacancy RateRent High Street Source: CBRE, Q2 2022.

8

In secondary areas, an available property in the Former Foreign Settlement area drew interest from multiple retailers over the quarter. The unit is in close proximity to the area where luxury brand stores are concentrated and has a flexible floor space of 30 tsubo. Elsewhere, an available property on Meriken Road secured a recycled goods retailer as its new tenant at roughly market-level rent.

CBRE RESEARCH

Q3 2021

Q4 2021

HighVacancy StreetRate Rent

Q1 2022

Q2 2022

62,000 Q2 2021 Vacancy RateRent High Street

Q3 2021

Q4 2021

Q1 2022

Q2 2022

HighVacancy StreetRate Rent

Source: CBRE, Q2 2022.

© 2022 CBRE, INC.

MarketView | JAPAN RETAIL | Q2 2022

Nagoya: Sakae

Fukuoka: Tenjin

High street rents slide by 0.7% to JPY 70,000

Owners broaden target industries rather than lower asking rents

The high street vacancy rate for Q2 2022 fell by 0.8 pp q-o-q to 0.0%. However, several properties are being on offer, some of which include relatively large size.

The high street vacancy rate for Q2 2022 fell by 0.6 pp q-o-q to 5.0%, with a new tenant confirmation in relatively large property.

An available property on the Otsu-dori high street attracted interest from multiple retailers this quarter, including luxury brands, general goods, and outdoor and sporting goods brands. In light of the current market situation, the property’s owner has expressed a willingness to accept rental offers a few percent below what the current tenant is paying. Another available property on the south side of Otsu-dori saw demand from a fast fashion retailer and an automotive showroom, while one on Hirokoji-dori was leased to a wristwatch brand, albeit after negotiations to lower the asking rent. As a result of these transactions, Sakae high streets rents fell by 0.7% q-o-q to JPY 70,000 per tsubo.

An available property on the Tenjin Nishi-dori high street secured an amusement arcade as its new tenant in Q2 2022. In response to weak retailer demand, the owner elected to broaden the range of industries it was willing to accept. The contracted rent is equivalent to or slightly above the original asking rent.

Meanwhile, a separate property on Tenjin Nishi-dori has stood vacant for some time. While it has attracted interest from several retailers, the rent levels and initial costs for CapEx items such as interior decor have dissuaded interest from potential tenants. Rather than lowering the asking rent, the owner has elected to mitigate this problem by broadening the range of industries being considered. Tenjin high street rents remained unchanged for the third straight quarter at JPY 46,500.

During the quarter, an available property in the secondary area of Iriecho-dori was leased by a furniture and general goods retailer, buoyed by its thriving sales figures during the pandemic. While the original unit extended across two levels, agreement was reached after reducing it to one.

Elsewhere, a unit previously occupied by a food retailer confirmed a separate food retailer as its next tenant.

During the quarter, a new store was opened by an outdoor and sporting goods brand in a secondary area on Kokutai-doro, representing the retailer’s first entry into the Kyushu market. Meanwhile, another available property on Kokutai-doro was secured by a shop specializing in the purchase of high-end brand goods (to be sold in other outlets). Both new stores are operated by companies whose sales have performed strongly during the pandemic, and which are also opening new stores in other areas.

Figure 17: High street vacancy rate & high street rent in Sakae

Figure 18: High street vacancy rate & high street rent in Tenjin

6%

75,000

6%

75,000

5%

70,000

5%

70,000

4%

65,000

4%

65,000

3%

60,000

3%

60,000

2%

55,000

2%

55,000

1%

50,000

1%

50,000

45,000

0%

0% Q2 2021

Q3 2021

High Street Rent Vacancy Rate

Source: CBRE, Q2 2022.

9

CBRE RESEARCH

Q4 2021

Vacancy Rate High Street Rent

Q1 2022

Q2 2022

45,000 Q2 2021 Vacancy HighRate Street Rent

Q3 2021

Q4 2021

Q1 2022

Q2 2022

High Street Rent Vacancy Rate

Source: CBRE, Q2 2022.

© 2022 CBRE, INC.

MarketView | JAPAN RETAIL | Q2 2022

Figure 19: Key Store Openings in Kansai, Nagoya and Fukuoka Q2 2022

Tenant

Area

Street Name

Size* (approx tsubo)

UMEDA

N/A

N/A

BUZZ CHAYAMACHI

Lee Mart

SHINSAIBASHI

Midosuji

30

Gurukasu City Building

Herman Miller

SHINSAIBASHI

Nagahori-dori

70

PRAIRIE Shinsaibashi Building

Standard Products

KYOTO

Shijo-dori

110

Nittochi Kyoto Shijo-dori Building

STUDIO ATAO

KYOTO

Karasuma-dori

35

LAQUE Shijo Karasuma

AINZ & TULPE

KOBE

Sannomiya Center gai

N/A

Sannomiya Zero Gate

BALENCIAGA

KOBE

Flower road

N/A

Kobe Hankyu

YOSHIDA

SAKAE

Otsu-dori

N/A

ABLE Building

MAISON SPECIAL

SAKAE

Mitsukura-dori

80

Tatsuko Building

NISHIKAWA

TENJIN

Meiji-dori

80

Tenjin Heiwa Building

TREK

TENJIN

Kokutai-doro

130

Diamondhills Daimyo Sakaguchi Building

Rakuten Mobile

Building Name

*Information in the above table are limited to those available on press releases, media reports, and other public domain. CBRE estimates are not included.

Source: CBRE, company press releases and media reports, Q2 2022.

Figure 20: Upcoming Retail Developments in Kansai, Nagoya and Fukuoka (GFA of 1,000 tsubo or more)

Name

Area

GFA (approx tsubo)

Developer

Open

Chunichi Building

SAKAE

34,000

The Chunichi Shimbun, Chunichi Building

(Tentative) Umeda 3-Chome Plan

UMEDA

69,000

Japan Post Holdings, West Japan Railway Company, etc.

Mar. 2024

(Tentative) Umekita Phase 2 Development Project

UMEDA

169,000

ORIX Real Estate Corporation, Hankyu Railway, etc.

Aug. 2024

Osaka Station New Station Building (Tentative)

UMEDA

17,800

Osaka Terminal Building

Fall 2024

(Tentative) Hulic Fukuoka Building Redevelopment

TENJIN

6,300

Hulic

Sep. 2024

Fukubiru Urban Area Redevelopment Project

TENJIN

44,000

Nishi-Nippon Railroad

Dec. 2024

(Tentative) Tenjin 1 chome North 14bangaiku Building

TENJIN

11,900

Nippon Life Insurance, SEKISUI HOUSE

Mar. 2025

(Tentative) Sumitomoseimei Fukuoka Bldg・Nishidori Business Center Redevelopment

TENJIN

12,700

SUMITOMO LIFE INSURANCE, FUKUOKA JISHO

May. 2025

SHINSAIBASHI

14,000

Hulic, Takenaka, JR WEST REAL ESTATE & DEVELOPMENT, PARCO

Feb. 2026

Effective utilization of land for Nishiki 3-chome 25 bangai-ku

SAKAE

33,200

Nagoya city, PARCO, Mitsubishi Estate, etc.

Kumoidori 5 chome area Redevepolment Project

KOBE

29,800

Kobe city, Mitsubishi estate, Mitsubishi Logistics, TC KOBELCO REAL ESTATE, etc.

FY 2027

JR Sannomiya New Station Building development Project

KOBE

30,300

West Japan Railway Company, Urban Renaissance Agency, Kobe city

FY 2029

(Tentative) Shinsaibashi Project

Spring 2024

Summer 2026

Note: Floor area may contain non-retail spaces.

Source: CBRE, company press releases and media report, Q2 2022.

10

CBRE RESEARCH

© 2022 CBRE, INC.

MarketView | JAPAN RETAIL | Q2 2022

Figure 21: Vacancy Rate

Figure 23: High Street Rent (JPY / Tsubo / Month)

Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022

Q3 2021

Q4 2021

Q1 2022

Q2 2022

Ginza

243,000

241,500

241,500

241,500

241,500

Omotesando/Harajuku

173,800

173,800

173,800

177,800

183,800

Shinjuku

177,500

172,000

170,000

170,000

170,000

Shibuya

127,700

126,800

126,800

126,800

126,800

Shinsaibashi

138,100

141,000

141,000

142,000

142,000

Umeda

113,500

95,000

94,000

95,000

94,500

Kyoto

66,500

65,500

64,500

65,500

65,000

Kobe

74,000

71,000

72,000

73,000

72,300

Ginza

5.1%

5.2%

4.3%

4.5%

3.1%

Omotesando /Harajuku

5.0%

4.8%

7.7%

7.2%

6.2%

Shinjuku

3.7%

4.6%

5.8%

8.0%

10.2%

Shibuya

4.6%

2.9%

3.1%

12.3%

9.1%

Shinsaibashi

8.7%

11.9%

12.7%

14.5%

13.1%

Kyoto

7.8%

7.8%

6.1%

8.0%

7.3%

Kobe

4.0%

6.5%

4.9%

7.1%

7.6%

Nagoya

Sakae

0.0%

0.0%

0.0%

0.8%

0.0%

Nagoya

Sakae

70,500

70,500

70,500

70,500

70,000

Fukuoka

Tenjin

3.6%

2.3%

3.6%

5.6%

5.0%

Fukuoka

Tenjin

47,500

46,500

46,500

46,500

46,500

Q2 2021

Q3 2021

Q4 2021

Q1 2022

Q2 2022

Ginza

400,000

400,000

400,000

400,000

400,000

Omotesando/Harajuku

300,000

300,000

300,000

320,000

350,000

Shinjuku

300,000

300,000

300,000

300,000

300,000

Shibuya

300,000

300,000

300,000

300,000

300,000

Shinsaibashi

250,000

250,000

250,000

250,000

250,000

Umeda

165,000

140,000

140,000

140,000

130,000

Kyoto

90,000

90,000

90,000

90,000

90,000

Kobe

100,000

120,000

120,000

120,000

120,000

Nagoya

Sakae

100,000

100,000

100,000

100,000

100,000

Fukuoka

Tenjin

100,000

100,000

100,000

100,000

100,000

Tokyo

Kansai

Tokyo

Kansai

Source: CBRE, Q2 2022.

Source: CBRE, Q2 2022.

Figure 22: Area Traffic Volume (Q2 2022)

Figure 24: Prime Rent (JPY / Tsubo / Month)

Ginza

Tokyo

Omotesando /Harajuku Shinjuku Shibuya Shinsaibashi

Kansai

Kyoto Kobe

Nagoya

Sakae

Fukuoka

Tenjin

Q-o-Q

Y-o-Y

＋18%

＋24%

＋14%

＋20%

＋14%

＋13%

＋13% ＋13% ＋17% ＋9%

＋16% ＋6%

＋24%

CBRE RESEARCH

Tokyo

＋14%

＋23%

Kansai

＋16% ＋11% －2%

* Aggregation of “au” smartphone users with individual consent, processed so that individuals cannot be identified.

Source: Giken Shoji International “KDDI Location Analyzer*” CBRE, Q2 2022.

11

Q2 2021

Source: CBRE, Q2 2022.

© 2022 CBRE, INC.

MarketView | JAPAN RETAIL | Q2 2022

Terms and Definitions

Vacancy Rate Subject Area Prime rent/ High Street Rent Area Traffic Volume Quarterly

Term

Vacancy Rate

Survey method

Prime rent High Street Rent Area Traffic Volume

• Vacancy rate for ground floor of 155 properties located in Ginza, 240 properties located in Omotesando/Harajuku, 58 properties located in Shinjku, 65 properties located in Shibuya, 169 properties located in Shinsaibashi, 174 properties located in Kyoto, 108 properties located in Kobe, 53 properties located in Sakae, and 202 properties located in Tenjin, in the high street areas assigned by CBRE • Only the spaces which are physically available for tenants at the time of survey are defined as vacant • Ground floor retail space for lease located in retail markets in in the high street areas assigned by CBRE with floor area of approx. 200 square meters.

Tokyo

Yokohama

Meiji Yasuda Seimei Building 2-1-1 Marunouchi, Chiyoda-ku, Tokyo

Yokohama ST Building 1-11-15 Kitasaiwai, Nishi-ku, Yokohama-shi, Kanagawa

Shiba Park

Kanazawa

Shiba Park Building B 2-4-1 Shibakoen, Minato-ku, Tokyo

Aube II Building 5-177 Kuratsuki, Kanazawa-shi, Ishikawa

Osaka

Nagoya

Grand Front Osaka 4-20, Ofuka-cho, Kita-ku, Osaka-shi, Osaka

Miyuki Building 3-20-27 Nishiki, Naka-ku, Nagoya-shi, Aichi

Sapporo

Hiroshima

Nihon Seimei Sapporo Building 4-1-1 Kitasanjonishi, Chuo-ku, Sapporo-shi, Hokkaido

Shishinyo Building 3-17 Fukuromachi, Naka-ku, Hiroshima-shi, Hiroshima

• The retail market areas assigned by CBRE Q1) End of March Q2) End of June Q3) End of September Q4) End of December • Physically available for tenants at the time of survey • Based on sample survey of the subject area, including CAM, and excluding any incentive such as free rent • Rents for prime areas within the main retail districts in major cities • Average of the upper rents and lower rents based on sample survey of the subject area, including CAM, and excluding any incentive such as free rent • y-o-y and q-o-q % changes of traffic volume in the subject area

Contacts

Sendai

Hiroshi Okubo

Kaoru Kurisu

Kumiko Ninomiya

Head of Research

Director

Analyst

Sendai Mark One 1-2-3 Chuo, Aoba-ku, Sendai-shi, Miyagi

hiroshi.okubo@cbre.co.jp

kaoru.kurisu@cbre.co.jp

kumiko.ninomiya@cbre.co.jp

Fukuoka Fukuoka Center Building 2-2-1 Hakata-Ekimae, Hakata-ku, Fukuoka-shi, Fukuoka

To learn more about CBRE Research, or to access additional research reports, please visit the Insights & Research at www.cbre.com/Insights&Research

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© Copyright 2022. All rights reserved. This report has been prepared in good faith, based on CBRE’s current anecdotal and evidence based views of the commercial real estate market. Although CBRE believes its views reflect market conditions on the date of this presentation, they are subject to significant uncertainties and contingencies, many of which are beyond CBRE’s control. In addition, many of CBRE’s views are opinion and/or projections based on CBRE’s subjective analyses of current market circumstances. Other firms may have different opinions, projections and analyses, and actual market conditions in the future may cause CBRE’s current views to later be incorrect. CBRE has no obligation to update its views herein if its opinions, projections, analyses or market circumstances later change.

12

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