In March of this year, the Tokyo office vacancy rate fell to its lowest level in three years. This is a sign that the commercial real estate market in the Japanese capital has avoided the slump plaguing other major cities around the world.
According to real estate agency Miki Shoji, the office vacancy rate in Tokyo's five central business districts fell to 5.47%, the lowest level since March 2021. Miki Shoji has compiled one of the most popular commercial office usage indicators in Tokyo. Rents have been falling for most of 2023, and so far this year, rents for existing buildings have been rising every month.
Miki Shoji said in the report that the Tokyo company moved to a better location in the central business district or signed a larger space contract, thereby reducing the vacancy rate. This number includes space that hasn't been emptied yet.
Tokyo has avoided the fate of other major global cities, which are facing record office vacancy rates and sharp declines in construction valuations since the pandemic. Remote work isn't getting much attention in Japan, where smaller living spaces and a stricter corporate culture force people to keep working in the office.
According to a survey conducted by Colliers International (Colliers) in February of this year, in the Tokyo metropolitan area, more than three-quarters of employees in their 20s to 60s work full time in the office or use a mix of work from home and company.
A Savills Plc (Savills Plc) report says several new office buildings will open at the end of 2023, which is expected to drive up Tokyo's vacancy rate, but supply has been well absorbed. “The improvements in the first half of 2024 are likely to stabilize,” the company said.