- Some 680,000 tsubo GFA will come online in the C5W in 2019 and 2020, increasing Tokyo’s office stock by 5%.
- Supply will be concentrated in the C5W, though the 18W will also see a large amount in 2020.
- Shibuya will see a large portion of its pipeline completed in 2019, while 2023 will likely be a watershed year for Toranomon, expected to account for over 50% of total supply that year.
- Although secondary vacancy is currently not an issue, increasing demand for centrally located, high-specification offices could affect older buildings in peripheral submarkets.
- While the popularity of quality co-working space appears to be supporting the take up of high-grade office space, if the trend reverses, the repercussions might be more than nominal.
- While supply is unlikely to significantly affect the market trend, a potential deterioration of economic conditions could weaken the rental outlook.
Oversupply fears are unlikely to materialise
Despite high levels of supply expected for 2020, the Tokyo Olympics year, a strong tailwind of demand looks set to keep vacancy tight. Large-scale development projects are changing market dynamics, especially in Shibuya and Toranomon. As long as economic conditions remain favourable, Tokyo’s office market could extend the current growth momentum.
Savills Research & Consultancy
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