Tokyo Otemachi Rents Keep Rising As No New Grade A Supply Lands In Q2

Tokyo's office market is giving investors a tight-supply signal: Grade A vacancy stayed below one percent in Q2 while rents rose strongly and no new prime supply was delivered during the quarter.

Vacancy Stayed Scarce

JLL placed Tokyo Grade A vacancy at 0.8 percent in Q2, up slightly from the prior quarter but still far below normal availability. The lack of new supply meant even strong tenant demand could not translate into broad net absorption.

Rents Rose In Core Submarkets

Average monthly gross rent reached JPY42,109 per tsubo, up 4.6 percent from the previous quarter and 16.4 percent from a year earlier. Otemachi-Marunouchi and Akasaka-Roppongi both saw rental growth, with core scarcity supporting landlord leverage.

Regional Evidence Supports The Theme

CBRE also reported rent gains across major office grades and cities, including Nagoya Grade A achievable rent moving above JPY30,000 per tsubo for the first time. That shows the tightness is not confined only to central Tokyo.

Buyer Checks

Investors should review lease expiries, rent reversion, tenant concentration, vacant floors, capex, seismic rating, energy performance and debt costs. Residential buyers near office cores should still compare management fees and resale depth.

Outlook

Tokyo prime income assets should remain supported while new supply is scarce and tenants upgrade. The risk is valuation rather than demand, especially if higher bond yields push investors to demand wider cap rates.

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