Office vacancy rates in March – Miki Shoji

According to Miki Shoji’s Office Report for March 2013, the vacancy rate in Tokyo’s central business districts of Chiyoda, Chuo, Minato, Shinjuku and Shibuya dropped by 0.01 points to 8.56%.

In Chiyoda-ku, the vacancy rate dropped 0.07 points to 6.59% as tenants began to move into recently completed Ochanomizu Sola City and existing buildings saw tenants combine their business operations in one space. 

The completion of Tokyo Square Garden added some extra floorspace to the market in Chuo-ku, which saw vacancy rates to rise by 0.55 points to 8.56%.

Past vacancy rates:

  • 2013/03: 8.56%
  • 2013/02: 8.57%
  • 2013/01: 8.56%
  • 2012/12: 8.67%
  • 2012/11: 8.76%
  • 2012/10: 8.74%
  • 2012/09: 8.90%

The vacancy rate in brand new buildings was 23.24%, down 0.74 points from February.

Vacancy rates by area:

  • Chiyoda-ku: 6.59% (down 0.07 points from February)
  • Chuo-ku: 8.56% (up 0.55 points)
  • Minato-ku: 10.43% (down 0.12 points)
  • Shinjuku-ku: 10.54% (down 0.06 points)
  • Shibuya-ku: 5.45% (down 0.53 points)

Nationwide vacancy rates:

  • Tokyo: 8.56%
  • Osaka: 11.25% (up 0.77 points from February)
  • Nagoya: 10.99% (down 0.19 points)
  • Sapporo: 9.22% (down 0.15 points)
  • Sendai: 13.53% (down 0.14 points)
  • Yokohama: 9.89% (up 0.01 points)
  • Fukuoka: 12.13% (down 0.24 points)

2012 saw a number of new large-scale office buildings completed in Tokyo’s 23 wards, which caused concern about a potential over-supply of office space. However, the forecast supply of new space in 2013 is expected to be 580,000 sqm, which is 67% lower than last year. Experts are anticipating that demand will see a sharp rise and the vacancy rate will drastically improve.

It is expected that as the office market improves, rents will face upwards pressure which will improve earnings of REITS and push up prices.

Average Office Rent:

The average monthly office rent in March was 16,504 Yen per Tsubo* (5001 Yen/sqm), down 0.26% (43 Yen) from February. This is the 9th month of continuous decline. The average monthly rent on brand new buildings was 25,291 Yen per Tsubo, and 16,302 Yen per Tsubo for existing buildings.

Average rent by area:

  • Chiyoda-ku: 17,936 Yen/Tsubo (up 105 Yen from February)
  • Chuo-ku: 15,640 Yen/Tsubo (down 108 Yen)
  • Minato-ku: 17,084 Yen/Tsubo (down 50 Yen)
  • Shinjuku-ku: 13,964 Yen/Tsubo (down 51 Yen)
  • Shibuya-ku: 16,918 Yen/Tsubo (up 14 Yen)

Average rent by city:

  • Tokyo: 16,504 Yen/Tsubo
  • Osaka: 11,307 Yen/Tsubo (down 8 Yen from February)
  • Nagoya: 10,841 Yen/Tsubo (down 13 Yen)
  • Sapporo: 8,235Yen/Tsubo (down 18 Yen)
  • Sendai: 9,099 Yen/Tsubo (down 13 Yen)
  • Yokohama: 10,544 Yen/Tsubo (up 11 Yen)
  • Fukuoka: 9,321 Yen/Tsubo (down 22 Yen)

*Note: 1 Tsubo = approximately 3.3 sqm or 35 sqft.

New Buildings in March:

The following new office buildings were completed in March 2013:

  • Tokyo Square Garden / Kyobashi, Chuo-ku / 24 floors /117,300 sqm
  • Ochanomizu Sola City / Kanda-Surugadai, Chiyoda-ku / 23 floors / 102,000 sqm
  • oak omotesando / Kita-Aoyama, Minato-ku / 9 floors / 13,900 sqm
  • KSK East Building / Hatchobori, Chuo-ku / 9 floors / 7,400 sqm
oak omotesando replaced the former Aoyama Obayashi Building (aka Hanae Mori Building).

Sources:
The Nikkei Shimbun, April 11, 2013.
Nikkei Asset Management, April 11, 2013.
Miki Shoji Office Report, March 2013.

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