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- Investment-grade offices in most markets have seen further mild corrections, and vacancy rates have also seen moderate increments.
- All-grade office rental growth remains mostly flat, while vacancy has loosened further.
- Expected cap rates for Grade A offices have tightened across most markets, showing the popularity of the sector.
- While the number of workers in Osaka, Aichi, and Fukuoka have been increasing, Miyagi and Hokkaido have begun to see notable declines over the past few years.
- The regional cities in this report all have multiple redevelopment plans in the pipeline that aim to energise and promote the city.
- While the current status of the pandemic appears manageable, uncertainty surrounding new variants is present.
Market fundamentals remain stable amidst slight softening in sentiment
GRAPH 1 | Investment-grade Office Performance, 2H/2021
With high vaccination rates and the plummet in COVID-19 cases, the softening sentiment seen in the market over this year seems manageable. Like Tokyo, prime assets remain mostly occupied and have seen few corrections in rent, while buildings with poor access are suffering, resulting in the overall deterioration of market rents and vacancy. However, each region’s fundamentals and prospects look different.
Savills Research & Consultancy