Office vacancy rates in September 2014 – Miki Shoji

According to Miki Shoji’s office report, the office vacancy rate in Tokyo’s five central business districts (Chiyoda, Chuo, Minato, Shinjuku and Shibuya) was 5.65% in September, down 0.37 points from the previous month and down 2.25 points from last year. This is the first time since February 2009 that vacancy rates had dropped to the 5% range.

The 5% range is considered to be the tipping point between supply and demand. As a result, real estate companies have started to raise rents. Mitsubishi Jisho have begun seeking an increase of rent of around 5 ~ 10% in the 30 buildings they own in the Marunouchi and Otemachi business district in front of Tokyo Station. Mori Building have also started negotiating with tenants in relatively new buildings for higher rents. Mitsui Fudosan are also setting higher rents for new leases.

Meanwhile, office tenants continue to seek ways to control costs and mid-size and regional building owners are hesitant to raise rents. While vacancy rates have fallen sharply, rents are not increasing at the same speed.

The vacancy rate in brand new office buildings was 13.90%, down 4.27 points from the previous month and down 4.22 points from last year.

The following office building was completed in September:

  • Ebisu First Square, Shibuya-ku: 12 floors, 15,982 sqm floor space.

Vacancy rates by area:

  • Chiyoda-ku: 5.42% (-0.42 points from the previous month; -0.81 points from last year)
  • Chuo-ku: 6.11% (-0.17 points; -2.11 points)
  • Minato-ku: 6.21% (-0.59 points; -3.06 points)
  • Shinjuku-ku: 5.25% (-0.27 points; -4.10 points)
  • Shibuya-ku: 3.96% (-0.05 points; -1.68 points)

Nationwide vacancy rates:

  • Tokyo: 5.65% (-0.37 points from the previous month; -2.25 points from last year)
  • Osaka: 8.14% (-0.22 points; -1.83 points)
  • Nagoya: 8.14% (-0.02 points; -1.86 points)
  • Sapporo: 8.23% (+0.03 points; -0.76 points)
  • Sendai: 11.24% (+0.27 points; -1.33 points)
  • Yokohama: 8.97% (-0.08 points: +0.16 points)
  • Fukuoka: 8.22% (-0.21 points; -2.91 points)

AVERAGE OFFICE RENT

The average monthly office rent in Tokyo’s five business districts was 16,805 Yen per Tsubo* (5,092 Yen/sqm) in September, up 76 Yen (+0.45%) from the previous month and up 575 Yen (+3.54%) from last year. This is the 9th month in a row to see a month-on-month increase in rent.

The average monthly rent in brand new office buildings was 27,000 Yen per Tsubo (8,182 Yen/sqm), up 410 Yen (+1.54%) from the previous month and up 1,422 Yen (+5.56%) from last year.

Average monthly office rent by area:

  • Chiyoda-ku: 18,450 Yen/Tsubo (+215 Yen from the previous month; +832 Yen from last year)
  • Chuo-ku: 16,042 Yen (-23 Yen; +784 Yen)
  • Minato-ku: 17,174 Yen (+27 Yen; +406 Yen)
  • Shinjuku-ku: 14,178 Yen (-7 Yen; +455 Yen)
  • Shibuya-ku: 17,627 Yen (+119 Yen; +617 Yen)

Average monthly office rent across Japan:

  • Tokyo: 16,805 Yen/Tsubo (+76 Yen from the previous month; +575 Yen from last year)
  • Osaka: 11,120 Yen/Tsubo (+4 Yen; -137 Yen)
  • Nagoya: 10,788 Yen/Tsubo (+6 Yen; -45 Yen)
  • Sapporo: 8,192 Yen/Tsubo (+13 Yen; +4 Yen)
  • Sendai: 9,102 Yen/Tsubo (-4 Yen; +1 Yen)
  • Yokohama: 10,471 Yen/Tsubo (-22 Yen; -93 Yen)
  • Fukuoka: 9,222 Yen/Tsubo (0 Yen; -36 Yen)

*1 Tsubo = approximately 3.3 sqm or 35 sqft.

Sources:
The Nikkei Shimbun, October 10, 2014.
Miki Shoji, October 9, 2014.

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