Solid occupier demand expected for offices and logistics, but regional discrepancy likely to widen
Tokyo Grade A Office - Large-scale of new supply poses rental correction

  • Office: In 2018, vacancy rates are likely to start rising in Tokyo but are expected to continue tightening in regional cities. As such, Tokyo rents are forecast to see a downward correction, whereas regional rents have further upside.
  • Logistics: Greater Tokyo will see a 40% increase in its stock of large-scale multi-tenant logistics facilities. While demand is solid mainly driven by e-commerce, the difference in the supply-demand balance by area will become further pronounced.
  • Retail: Ginza high street rents are expected to continue trending down in 2018. However, with an expected recovery in demand from luxury retailers and an expansion of show-room strategies, rents may start to rise at the start of 2019.
  • Investment: While investor sentiment remains high, we look for a y-o-y drop in volume by about 6% to JPY3.7 trillion in 2018. Upside in rents is becoming limited for some assets and/or areas, making investors more cautious on pricing.