Tokyo
• Robustdemand comes fromindependent international brands.
Retail MarketDynamics Q22025
Fundamentals
• TheHulicAoyamaBuildingRedevelopment Projectcommences construction alongside Omotesando.
• Capitalvaluegrowthdecelerates, reflecting stableground-floor rent growth.
Despiteweakening consumer sentiment, overallconsumption showedsignsofrecovery inMay,supported byimproving employee income. Inbound consumption rose30%y-o-yinQ12025,driven bya record number offoreign visitorarrivals.Demand fornewopenings remained robustinQ2,driven byhigh-performing independent international brands,whileappetite frommajorinternational brand groupsmoderated asthey finalisedspaceneeds. Newopenings in thequarterincluded OnitsukaTigerin Omotesando andEmporio ArmaniinGinza.
Construction commenced ontheHulicAoyamaBuilding redevelopment project, a9,600sqmGFAproject inaprime Omotesando location inQ2.Thebuilding, dueinMay2028,has alreadysecuredtenants foritsretailspaceandwillalsofeatureoffice andF&Bservices.TheGinza2-ChomeMiyuki-doridevelopment project hasbeenconfirmed. Redeveloped together withtheadjacent former BrioniGinzaBuilding,thiswillbearetailbuildingwithaGFAof 5,700sqm,dueinthesummerof2028alongside Sotobori-dori
Rentsaveraged JPY99,810pertsubo,permonth inQ22025, increasing0.2%q-o-q and5.4%y-o-y. Moderated rentgrowthwas driven byupper floorswhileground floorsremained stable.This markedthe13thconsecutive quarterofincreases.Tokyo's prime retailmarketsawcapitalvalueswerestableq-o-q andup6.2%y-o-y inQ22025,driven byrent growth. MitsuiFudosan'sacquisitionof Ginza'sMarugen31Building,slatedfordemolition, presentsa redevelopment opportunity.
Outlook
According totheJuneOxford Economics' forecast, private consumption wasunchanged andexpected toincreaseby0.9%in 2025.Consumption isexpected torecover asemployment and income improve. Risksinclude trendsinconsumer sentiment. Rent growthisexpected topersistintheleasingmarket,thoughata slowingrate.Correspondingly, moderate growthincapitalvaluesis projected fortheinvestment market,aligningwithmodest rent increases,ascapratesareexpected toholdsteady.
Note:FinancialindicatorsarefortheprimeretailmarketsofGinzaandOmotesando DataisonanNLAbasis.RetailsalesgrowthfiguresareforTokyoPrefecture.
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