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- Investment-grade offices have seen mild corrections in all regional submarkets. Vacancy loosened mildly in Osaka and Fukuoka, and tightened in Nagoya.
- All-grade office rental trends have varied across submarkets. Rents in Sapporo and Fukuoka increased, while others have mostly stayed flat.
- Cap rates for Grade A offices have experienced further tightening, indicating that investor appetite remains sound in the sector.
- Investment volumes in 2022 have been slightly lower than those of the same period in 2021, but a few large transactions were observed.
- Aside from Osaka, new supply has been limited in 2022, allowing markets to absorb available office space.
- Notable levels of supply are expected over the next few years, which might cause some fluctuations at the property level.
Stability in the market with some bifurcation
The overall outlook appears to be stable, and only modest corrections were observed over the past half-year. Indeed adjustments stemmed primarily from the widening gap between overperformers and underperformers. The large supply scheduled for completion over the next few years may accelerate the bifurcation. Competition for tenants may result in the continued struggle of poorly priced and older properties.
Savills Research & Consultancy