Cushman & Wakefield's 2026 Q1 Tokyo Office Market Report Analysis

Overview of the 2026 Q1 Tokyo Office Market Report

Cushman & Wakefield (C&W), a global comprehensive real estate service company headquartered in Chicago, Illinois, has released its latest report on the Tokyo office market. As Japan's offices continue to face several challenges and opportunities, the report aims to provide insights into future trends and supply forecasts.

Supply Outlook

In the next year, approximately 147,000 tsubo of new office space is expected to hit the market. Despite this influx, the take-up rate, which has remained robust, is expected to continue at high levels similar to previous periods. The current favorable market sentiment is bolstered by solid corporate earnings and an increasing number of office workers. These dynamics are likely to maintain low vacancy rates and an ongoing trend of rising rental prices, which have already begun to manifest.

Nevertheless, geopolitical tensions, particularly concerning the Middle East, present concerns over supply chain uncertainties and rising energy-related costs. Coupled with escalating construction costs, any delays or postponements in new projects might exacerbate competition for available office spaces. This could lead to an even stronger upward pressure on rents in the short term. Conversely, if these rising costs impact corporate profits and employment levels, exceeding the tolerance of tenant businesses, the overall demand for office spaces may slow down.

Demand and Rental Trends

The average assumed rental rate for Grade A offices in Tokyo's central five districts has reached ¥41,066 per tsubo, marking an increase of 11% year-on-year and 4.6% from the previous quarter. Vacancy rates are expected to drop below 1% for the first time in nearly five years by Q3 2025, with projections suggesting a fall to as low as 0.5% by year-end. This low vacancy trend is anticipated to persist into Q1 2026.

Notably, the TOFROM YAESU TOWER in the Yaesu area and THE LINK PILLAR 2 in the Shinagawa area have each achieved over 80% pre-leasing rates upon completion. Furthermore, net absorption rates are currently aligning closely with new supply rates, indicating a healthy absorption of newly available space. Demand remains robust, with 90.2% of new buildings slated for completion within the next year already secured by tenants.

Looking beyond 2026, the expected supply in 2027 and 2028 is forecasted to fall below the ten-year average annual supply of 129,000 tsubo. This suggests that demand is likely to outstrip supply until at least 2029, setting the stage for a continuing competitive market landscape.

Conclusion

Cushman & Wakefield's insights underline the complexities of the Tokyo office market as it navigates through both domestic and international challenges. The balance between rising rents and the potential strain on tenant corporations due to escalating costs will be critical to watch in the upcoming quarters.

For more detailed insights, readers can access the full report and other market insights via the official website of Cushman & Wakefield and download the PDF reports for further analysis.

About Cushman & Wakefield

Cushman & Wakefield (C&W) is one of the leading commercial real estate service companies listed on the New York Stock Exchange. With approximately 52,000 employees operating in around 400 offices across 60 countries, C&W offers services ranging from facility management to leasing and project management. The company boasts a projected revenue of $9.4 billion for 2024 under its ethos of 'Better never settles', earning recognition for its award-winning corporate culture in the industry. For more information, visit Cushman & Wakefield's official website.