Rental corrections have become less marked, and an equilibrium point could be reached soon.
- Corrections in rent and changes in vacancy seen in the central five wards (C5W) have become increasingly gentle.
- Average Grade A office market rents in the C5W fell 1.2% quarter-on-quarter (QoQ) and 7.0% year-on-year (YoY), and now stand at JPY33,266 per tsubo per month.
- The average Grade A office vacancy rate in the C5W declined 0.1ppts over the quarter but increased 1.5ppts YoY to 2.7% in Q1/2022.
- Average large-scale Grade B office rents declined to JPY25,143 per tsubo per month – a contraction of 1.5% QoQ and 7.8% YoY.
- The average vacancy rate in the Grade B market stayed flat over the quarter at 3.6%, translating to an increment of 1.4ppts YoY.
- Shinjuku has seen the largest correction in rents amongst the C5W since the pandemic. However, there is some divergence between the performances of different submarkets.
- There is uncertainty in the global economy, and high commodity and energy prices are likely to slow recovery. However, the Japanese market is likely to steadily continue approaching normalcy.