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Japan Office Market Outlook Is Uncertain As Remote Work Takes Root

Oct 4, 2023 – Remote work appeared to have taken root in Japan post-Covid-19, with the office attendance rate registering around 70% and showing no signs of ticking up. the Nikkei Real Estate Market Report said.

According to Sanko Estate, the vacancy rate for class-A buildings in central Tokyo in the first quarter of 2023 increased by 1.4 percentage points year-on-year to 4.7%, and the rent per tsubo decreased by 5.8% year-on-year to 27,479 yen per tsubo (US$56 per m²).

According to Mori Building, while the new supply of large-scale offices in the 23 wards of Tokyo was low at 610,000 m² in 2021 and 480,000 m² in 2022, it was 1,260,000 m² in 2023 and 1,360,000 m² in 2025, exceeding the historical average. NLI Research Institute

Based on the data available, “it is difficult to absorb all future supply with the demand that lacks strength”, the NLI Research Institute said. The net absorption rate in the five central wards of Tokyo has been negative for the past three years, showing, -0.3% in 2020, -1.6% in 2021, and -0.1% in 2022. The situation in major regional cities is the same, according to the report.