Strong demand, coupled with extremely low vacancy, is pushing up average rents in the C5W.
- Grade A stock in Tokyo’s C5W is being snapped up by firms which are eager to expand or consolidate offices. Buildings with large floor plates that can accommodate these needs are thus in high demand.
- Average passing rents for Grade A office space in the C5W grew to JPY35,257 per tsubo per month, representing a gain of 1.9% quarter-on-quarter (QoQ) and 5.6% year-on-year (YoY).
- The average Grade A office vacancy rate in the C5W hit 0.4% in Q1/2019, dipping by 0.1 percentage points (ppts) QoQ and by 0.4ppts YoY.
- Average passing rents for large-scale Grade B office space rose to JPY26,827 per tsubo per month, growing by 1.7% QoQ and 6.5% YoY.
- The average large-scale Grade B office vacancy rate is now 0.4%, unchanged QoQ but 0.3ppts lower YoY.
- Top-line rents are growing strongly in Shibuya, where vacancy is the tightest and the volume of new supply is large compared to existing stock.
- While the outlook for 2019 seems stable, rental growth could slow or evaporate if an external shock emerges and weakens demand.
