Fukuoka Office Market Summary
Rent growth is accelerating, driven by Hakata Station area where supply and demand are tightening.
Economy
According to Bank of Japan’s June Tankan survey on Kyushu and Okinawa, the business sentiment of all industries improved by 4 points to 22 points from the previous survey in March. The Manufacturing sector improved significantly, by 9 points, while the non-manufacturing sector deteriorated by 3 points but remained at relatively high levels.
Demand and Supply
Research| For 2019 to 2023, take -up, completions and vacancy rate are year-end annual. For 2024, take-up, completions and vacancy rate are as at 2Q24. Future supply is for the remainder of 2024.
In 2Q24, the Fukuoka Grade A office market saw net absorption totalling 1,400 sqm. Demand was strong from many industries, including information and communications, financial and insurance and electricity, gas, heat supply and water supply, with positive relocation purposes including new office establishments, consolidations and flight to quality.
Physical Indicators
Source: JLL
No new supply entered the market in 2Q24.
The vacancy rate in 2Q24 was 5.6%, decreasing 30 bps q-o-q and 240 bps y-o-y. The aforementioned demand, particularly for new and recently constructed office buildings, led to a decline in the vacancy rate.
Investor interest remains high but the scarcity of opportunities is holding back the total direct investment.
Asset Performance
In 2Q24, rents increased to JPY 20,180 per tsubo, per month, up 0.7% q-o-q and 1.8% y-oy. This was the fourth consecutive quarter of an increase, and the pace of the increase accelerated from the previous quarter. The Hakata Station area, where supply and demand are extremely tight, led the rise.
In 2Q24, capital values rose 1.6% q-o-q and 3.0% y-o-y. The increase was the fourth consecutive quarterly increase. As investment yields remained stable, the increase in capital values reflected rising rents. No investment transactions in Grade A office space were identified during the quarter.
Investment Market
Total direct investment in Fukuoka Prefecture in 2Q24 amounted to JPY 6.3 billion. This was a decrease of 81.2% q-o-q and 77.8% y-o-y. The total investment in 1H24 amounted to JPY 39.9 billion, an increase of 183.1% h-o-h and a decrease of 24.6% y-o-y.
Indices
Outlook
According to Oxford Economics, Fukuoka City’s real GDP growth is forecast to grow 1.2% in 2024. Risks include the overseas economy and the inflation trend, which would impact the City's economy.
In the leasing market, despite the expectation that demand will remain robust, vacancy rates are expected to rise and place downward pressure on rents due to the large supply scheduled to enter the market.
In the investment market, interest from various investors is expected to remain strong, but opportunities will be limited, which could generate fierce competition. Investment yields might see compression in prime offics but are expected to remain stable overall, as such, capital values are expected to fluctuate to the extent to reflect rent trends. A rise in long-term interest rates could add upward pressure on investment yields..
Property Clock
Fukuoka Osaka
Key Performance Indicators
Occupational market
Fukuoka Grade A office
2-kus (Chuo, Hakata)
Jones Lang LaSalle K.K.
Tokyo Headquarters Kioi Tower, Tokyo Garden Terrace Kioicho
1-3 Kioi-cho Chiyoda-ku, Tokyo 102-0094
+81 3 4361 1800
Fukuoka Office
Daihakata Bldg.
2-20-1 Hakata-ekimae, Hakata-ku, Fukuoka-shi Fukuoka 812-0011
+81 92 233 6801
Osaka Office Nippon Life
Yodoyabashi Building
3-5-29 Kitahama Chuo-ku, Osaka 541-0041
+81 6 7662 8400
Nagoya Office
JP Tower Nagoya 1-1-1 Meieki, Nakamura-ku, Nagoya-shi
Aichi 450-6321
+81 52 856 3357
Contact
Takeshi Akagi Head of Research Research - Japan takeshi.akagi@jll.com
Takeshi Yamaguchi Research Director Research - Japan takeshi.yamaguchi@jll.com
Naoko Iwanaga Senior Director Research - Japan naoko.iwanaga@jll.com
About JLL
For over 200 years, JLL (NYSE: JLL), a leading global commercial real estate and investment management company, has helped clients buy, build, occupy, manage and invest in a variety of commercial, industrial, hotel, residential and retail properties A Fortune 500® company with annual revenue of $20 8 billion and operations in over 80 countries around the world, our more than 108,000 employees bring the power of a global platform combined with local expertise Driven by our purpose to shape the future of real estate for a better world, we help our clients, people and communities SEE A BRIGHTER WAYSM JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated For further information, visitjll com
About JLL Research
JLL’s research team delivers intelligence, analysis and insight through marketleading reports and services that illuminate today’s commercial real estate dynamics and identify tomorrow’s challenges and opportunities. Our more than 550 global research professionals track and analyze economic and property trends and forecast future conditions in over 60 countries, producing unrivalled local and global perspectives. Our research and expertise, fueled by real-time information and innovative thinking around the world, creates a competitive advantage for our clients and drives successful strategies and optimal real estate decisions.
