New Research

Office Market Report
Tokyo | Q3 2018


(1 tsubo = 3.3 sqm)

  • ● In the July-September 2018 quarter, the Tokyo 23 Wards' office market saw a continued drop in the vacancy rate on the back of robust demand as companies required office space to secure personnel. There were active inquiries for vacancies, as evidenced by vacancies being filled before going on the market and vacancy information being met with a flood of applicants. New contract rent has risen sharply as a result.
  • ● The vacancy rate was 2.01%, down 0.27 points from the previous quarter. The Decrease in Vacant Space exceeded Increase, with vacant space decreasing by 252,000 tsubo and increasing by 223,000 tsubo. The rise in the Vacancy Turnover Ratio (the ratio of vacant space leased during the quarter to the overall vacancy stock) continued to accelerate at 46.1%.
  • ● The New Contract Rent Index (the level of new lease rent) was 122, up 9 points. The rising trend, which had been mild up to now, seems to be gathering pace. The Contract Rent Diffusion Index, calculated by subtracting the percentage of buildings with a rent decrease from that of buildings with a rent increase, remained above zero for the fourteenth consecutive quarter at +23.
  • ● The Paying Rent Index (the level of new lease rent and that of existing lease rent combined) was unchanged at 91.
  • Average Free Rent Months of Lease with Free Rent was 2.9 months, down 0.2 months. Granting of free rent dropped further due to a lessors' market, with a 4.2% ratio of free rent granted for six months or more.
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