Asia Pacific Office Outlook 2024

TOKYO

K E Y M E S S AG E S

SUPPLY

DEMAND

RENTS

KEY OUTLOOK

 In 2024, annual supply is expected to fall to 60% below the 10-year average to 74,700 tsubo (247,100sqm).  However, pent-up supply is forecast to re-enter the Tokyo C5W market in the three years from 2025, totaling 375,723 tsubo (1,242,060 sqm)—or 14% of total stock at the end of 2023.

 With Tokyo’s stable office attendance rate, tenant demand for new or renovated properties has started to normalize, with notable growth in client inquiries.  The overall net absorption trend remains stable through the market cycle. However, large incoming supply is expected to lift the overall vacancy rate toward 6% over the next three years.

 Rents are expected to

 With incoming supply exceeding existing demand, we expect Tokyo C5W Grade A office vacancy to rise over the next three years throughout the market downcycle.  We expect the net effective rent to decline around 4% on real terms over the next three years. This translates into near-flat rent movement with the current inflationary outlook, prompting more landlords to adopt flexible leasing strategies.

remain near flat over the next three years.

 Tenants retain pricing power. Most landlords prioritise minimising

vacancy by offering rental discounts in response to rising vacancy concerns.