Optimism is growing with firm demand and moderate supply in 2024.
- Office markets appear to maintain positive momentum, with rents experiencing sustained rental growth. Vacancies also continue to tighten overall.
- Average Grade A office rents in the C5W increased by 1.1% quarter-on-quarter (QoQ) and 1.9% year-on-year (YoY) to JPY33,000 per tsubo per month.
- The average Grade A office vacancy rate in the C5W tightened by 0.1 percentage points (ppts) QoQ but rose by 0.3ppts YoY to 2.9%.
- Average large-scale Grade B office rents saw a modest 0.5% QoQ increment, translating to a steady 2.1% YoY increase to JPY25,012 per tsubo per month.
- Vacancy rates in the Grade B market tightened moderately by 0.8ppts QoQ and 1.2ppts YoY to 2.6%.
- Office markets should continue to see stability in 2024 given the limited supply of new offices, but a significant influx of supply in 2025 may lead to some volatility.
- Mixed-use developments are becoming the standard, offering versatility to meet the evolving demands of tenants, diversifying revenue streams, as well as boosting the value of office spaces.