Tokyo Office Leasing Q1/2022

Rates of rental decline slow

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.

Rental corrections in Japan’s office market have slowed over the past few quarters, suggesting that an equilibrium point might soon be reached. While uncertainty in the global economy is likely to slow recovery, Japan’s market should gradually approach normalcy.

Savills Research & Consultancy
Map 1

GRAPH 1 | Office Rents And Vacancy In Tokyo’s C5W*, 2011 to Q1/2022