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Cushman & Wakefield's Tokyo Office Market Report for Q2 2025

Cushman & Wakefield (C&W), a leading global commercial real estate services firm, has recently released its comprehensive report on the office market in Tokyo. This analysis provides insights into current trends, future projections, and economic factors that impact the office leasing landscape in one of the world's most dynamic cities.

Employment Outlook

The report forecasts a steady growth in employment related to office workers in Tokyo, projecting an average annual increase of approximately 1% over the next two years, translating to about 10,000 new jobs each year. This growth is calibrated against the backdrop of Japan's broader economic recovery, with the real GDP growth rate expected to improve from 0.2% in 2024 to around 0.7% in 2025, despite global economic uncertainties, particularly due to trade policies affecting imports.

Robust Demand and Office Space Trends

By the second quarter of 2025, C&W anticipates that net absorption of Grade A office space in Tokyo’s central wards will reach approximately 223,000 tsubo, doubling compared to the previous year. With a burgeoning demand for more polished office environments, companies are increasingly transitioning from lower-grade buildings to Grade A offices, leading to an expected average occupancy rate of 75.3% by the end of Q2 2025.

Moreover, the expected increase in office space requirements aligns with a rising trend of corporations prioritizing labor productivity improvements by enhancing their office environments.

Rental Trends

As demand continues to outpace supply, average anticipated rental rates for Grade A offices are projected to surge by 6.7% year-on-year to reach around ¥37,639 per tsubo. The increase in rents is influenced by decreasing vacancy rates and the rise in construction costs, which have jumped by nearly 30% since 2019.

Within specific submarkets, particularly areas such as Shinagawa and Shibaura, the rental growth is even more pronounced at 14.8% and 18.2%, respectively. While there may be a slowdown in some rental growth rates due to a projected reduction in new supply from 2026 to 2027, the overall trends indicate that rental prices will continue to rise in the coming years, with expected additional increases averaging around 5% annually.

Economic Advisory

Despite concerns regarding the impact of U.S. import tariffs on the Japanese economy, a decrease in oil prices is anticipated to ease operational costs for businesses. C&W estimates that corporate profitability will maintain strong levels, projecting a slight decrease of 2.1% in operating income for the fiscal year, yet still remaining robust compared to the past decade.

The Tokyo job market continues to outpace the national average, highlighting the city’s role as a crucial hub for both local and international businesses. As such, the outlook for the Tokyo office market remains positive, driven by persistent demand and a thriving workforce.

For more in-depth insights and detailed data, the comprehensive report can be downloaded from C&W's official site.

Cushman & Wakefield remains committed to delivering industry-leading research and analysis, supporting businesses in navigating the complexities of the real estate market.

About Cushman & Wakefield

Cushman & Wakefield is a premier global provider of commercial real estate services, with a presence in about 60 countries and employing around 52,000 professionals. The company is publicly traded on the New York Stock Exchange and has consistently demonstrated strong performance, with projected revenues totaling $9.4 billion for 2024. Guided by an ethos of constant improvement, C&W has garnered numerous accolades, testifying to its esteemed corporate culture and industry recognition.

To learn more about Cushman & Wakefield and access further market reports, please visit their official website: Cushman & Wakefield.