Research
TokyoOffice MarketDynamics Q32024
Tokyo
• Netabsorption outperforms expectations.
• Vacancyratefallstothelow3%range.
• Rents continue toriseforthreeconsecutive quarters.
According totheTankanSurveyinSeptember, thediffusionindex of largemanufacturerswasinlinewiththeprevious quarterat13.The index oflargenon-manufacturers was34androse forthefirsttimein twoquarters.Relocation demand among companies hasbeen strong. Netabsorption intheGradeAoffice marketinTokyo was 91,300sqminQ32024.Byindustry, thefigurewasdriven by information andcommunications, manufacturing, andfinance and insurance.
OneGradeAoffice buildingentered themarketinQ32024,namely Toda Building(NLA:34,500sqm),increasingstockby0.3%q-o-q. Tokyo's vacancy rateintheGradeAofficemarketinQ32024 averaged 3.1%andfell50bpsq-o-q and160bpsy-o-y. However, by submarket,thevacancy rateroseslightlyinOtemachi/Marunouchi, whileitvastlyimproved inAkasaka/Roppongi.
Rents inTokyo's GradeAofficemarketaveraged JPY34,610per
tsubo,permonth, up1.1%q-o-q and3.1%y-o-ybyend-Q3 2024. Rents roseinbothAkasaka/Roppongi andOtemachi/Marunouchias vacanciesfilled,particularlyinAkasaka/Roppongi. Capitalvaluesin Q32024rose1.4%q-o-q and4.8%y-o-y, supported byariseinrents andunchanged caprates.Notabletransactionsincluded Nomura RealEstateMasterFund'sdisposition ofHarumiIslandTriton Square OfficeTower Y(stratatitle)forJPY23billion.
Outlook
According toOxfordEconomics' forecastasofSeptember 2024,the GDPgrowth fortheend of2024is0.2%andtheCPIis2.3%.Risks include higherinflation, volatilityinfinancialmarketsandpolitical uncertainty. Tenantsareexpected torelocate tomore competitive buildingswithmoreavailableopportunities,which willcontribute to furtherrentgrowth. Capitalvaluesareexpected toriseintoyear-end duetorisingrents, andcapratestoremainunchanged.
Fundamentals
Note:Financialandphysical indicatorsareforthe5KusGradeAofficemarket.Datais onanNLAbasis.
Historicalsupplyanddemandtrends
s.m.(thousands)
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Formoreinformation,pleasecontact
YutoOhigashi
Senior Director
Research-Japan
yuto.ohigashi@jll.com Research
TokyoOffice MarketDynamics Q32024
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