ASIA PACIFIC OUTLOOK 2025

TOKYO

KEY MESSAGES

Supply

Demand

Rents

Key Outlook

We expect the Tokyo C5W Grade A office vacancy level to remain stable, tracking at around 4% over the next three years through the current market cycle. We expect the net effective rent level to rise at around 2% 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 to achieve additional income returns.

New supply is forecast to hit a cyclical peak in 2025, totaling 188,467 tsubo (622K sq m) representing around 6% of total stock as at the end of 2023. However, continued delivery delays from rising construction costs will ease the supply pressures ahead. The new supply wave is then expected to subside until the next historical peak expected in 2029.

Tokyo’s employment continue to grow, adding headcount of around 282,000 to the labor force since 2019. The net absorption trend is also expected to remain positive, reflecting Tokyo’s stable office attendance rate, and attracting local and regional talent in recent years. A high commitment rate for incoming supply, tracking above 70%, is likely to limit any notable vacancy increase above the 4% mark. We expect a low and stable vacancy trend

Rents are expected to increase at CAGR of 3% , recovering to the pre-COVID level within the next three years.

Landlords are gaining pricing power in popular locations. By submarket, a pocket of weakness still exists where supply concerns are capping the trailing rent growth to below 3%.

during the current rental market cycle until 2028.

Cushman & Wakefield

ASIA PACIFIC OUTLOOK 2025