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- Average 1F rents in Tokyo increased by 3.6% half-year-on-half-year (HoH). Prime retail streets continue to perform well, and vacancies remain minimal.
- In regional markets, average 1F asking rents decreased by 1.1% over the past half-year. Major regional submarkets continue to see strong demand with vacancies staying tight.
- Prime properties facing the main streets remain highly sought after by major retailers seeking brand visibility, whereas some subprime properties are facing elevated vacancies.
- While luxury brands remain resilient and continue to witness new store openings in prime locations, leasing demand from high-end segments, such as sports and leisure goods are increasing in proportion, supporting the competitive leasing landscape in core retail areas.
- Policies aimed at shifting inbound tourism towards regional areas are likely to generate further windfall for local retail markets moving forward, particularly as inbound visitors extend beyond major cities.
- Retail investment volumes have had a slow start in 1H/2025 due to global headwinds and transaction volumes as of Q3/2025 are around 20% lower than the same period last year.
- Growing investor interest has been observed in regional and suburban retail properties, supported by their stable revenue streams and significant potential for strategic asset management.
Retail momentum is taking shape amid global headwinds
The retail sector continues to build on previous years' positive momentum, supported by sustained inbound tourism growth and strong tenant demand. Luxury goods continue to anchor retail consumption, but consumer demands are gradually shifting towards unique, experiential products and services. Government efforts are underway to direct inbound tourism towards regional destinations, boding well for local retail as visitors venture beyond major cities.
Savills Research & Consultancy