According to a report published by Mori Building on May 25, a total of 1.87 million square meters (approx. 20 million sq.ft) of new office space is expected to be supplied in Tokyo’s 23 wards in 2020. This is the second-highest level seen since the company began collecting data in 1987. Despite the large supply, most of the new office space is already leased.
The previous record was an annual supply of 2.16 million square meters seen in 2003. Large commercial projects completed in 2020 include Otemachi One (357,000 sqm), Tokyo World Gate Kamiyacho Trust Tower (195,000 sqm), and Toranomon Hills Business Tower (172,900 sqm).
2021 and 2022 is forecast to see annual supply drop to around 540,000 square meters, before recovering to 1.43 million square meters in 2023. Mori’s Toranomon-Azabudai Project is expected to add 213,900 square meters of office space when completed in early 2023.
With a growing number of companies quickly implementing remote-work options amidst the coronavirus pandemic, there are some signs of office leases being cancelled as companies seek to reduce operating costs and shrink office space. This could have a potential impact on the record-low office vacancy rates that central Tokyo landlords have been enjoying for the past few years. The average office vacancy rate in Tokyo’s 23 wards was 1.8% in 2019, down from the most recent peak of 7.8% seen in 2012 when the property market bottomed out.
Mori Building News Release, May 25, 2020.
The Nikkei Shimbun, May 25, 2020.
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