Nov 5, 2023 – Japan’s office take-up momentum slowed, with the weighted average occupancy rate for 35 buildings falling five percentage points to 61% from levels in a previous survey six months ago.
According to the Nikkei Real Estate Market Report, the slowing momentum is due to a large supply of offices that has flooded the market since the start of the year.
“Since the last survey, aggregate gross floor area has increased by slightly more than 240,000 m2. The larger the tenant, the more likely it is to downsize its office space due to remote work arrangements when relocating. As such, large-scale buildings are taking considerable time to fill up,” the report said.
The report surveyed the status of tenant occupancy for rental office buildings with gross floor areas of 10,000 m² or more from mid-August to early September 2023. This survey focused on 35 newly constructed buildings that were either completed or are scheduled for completion between October 2021 and October 2024.
The occupancy rate of the completed buildings is 70%, down 14 percentage points from the previous survey. The secured tenant rate for the 17 uncompleted buildings is 46%. This is down six percentage points despite the aggregate gross floor area being about 105,000 m2 lower than the last survey. “While there is a sense of uncertainty about the future, the rate of securing tenants is expected to accelerate toward the end of the fiscal year,” the report said.