Tokyo
• Steady tenant demand whilevacancyratesremainlimitedandnetabsorptionispositivealthoughlimitednew supplywas completed thisquarter
• Rents riseforthesixthconsecutive quarter
• Furtherdecline invacancy rateswithalmostnoremaining spaceinOtemachi/Marunouchi
According totheTankanSurveyinJune, thediffusionindex oflarge manufacturersrose1point to13,thefirstriseintwoquartersdueto solidrecovery intheironandsteelsector.Theindex oflargenonmanufacturersfell1point to34duetoinbound demand. Strong demand forofficesisseenduetoheadcount increasesandflight-toqualityrelocations. Netabsorptionwasaround 30,800sqminQ2 2025.Byindustry,thefigurewasdriven byinformation services, wholesaleandretailtrade,andprofessional services.
Onenew GradeAofficebuildingwascompleted inQ22025.Tokyo's vacancy rateintheGradeAofficemarketinQ2averaged 2.4%andfell 10bpsq-o-q and120bpsy-o-y. Bysubmarket,thevacancyratefor Otemachi/MarunouchiandAkasaka/Roppongi submarketsfurther compressed, withsub-1%levels seenintheformer.
Rents averaged JPY36,237pertsubo,permonth, up2.0%q-o-q and 5.9%y-o-y byendQ22025.Rents inbothAkasaka/Roppongi and
Otemachi/Marunouchisubmarketswereupaslandlord-favourable marketconditions continue duetotightsupplyanddemand. Capital valuesinQ22025wereup2.9%q-o-q and9.5%y-o-y, reflecting the continualriseinrents andunchanged capratesfrom theprevious quarter.Anotabletransactionannounced thisquarterwasthe acquisitionofAkasakaParkBuildingbyMitsubishiEstate.
Outlook
According toOxfordEconomics' forecastasofJune 2025,theGDP growthforyear-end 2025is0.8%andtheCPIis2.8%.Risksinclude theimpactoftariffsoncorporate activityandadownturn inoverseas economies. Leasingvolumesareexpected tostaysolidinthesecond halfoftheyearasdemand forexistingbuildingsisvery robustdueto strongappetite fromcorporates. Capitalvaluesarealsoexpected to risehigherasrentincreasesexceed projections.
Fundamentals
Note:Financialandphysical indicatorsareforthe5KusGradeAofficemarket.Datais onanNLAbasis.
Historicalsupplyanddemandtrends
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