#Japan #Tokyo #Supply Chain #Cushman & Wakefield #Logistics Facilities

Analysis of the Logistics Facility Market Trends for 2025

Cushman & Wakefield, a leading global real estate services firm, recently released its Logistics Facility 2025 Mid-Year Report. This report provides vital insights into the shifting dynamics of the logistics real estate sector.

As of June 2025, freight transport volumes showed a significant decline, with a 7.1% drop in tonnage compared to the previous year, and a slight decline of 0.1% in ton-kilometers. According to NX Research Institute, the logistics activity index has recorded double-digit declines for nine consecutive quarters, projecting further deterioration with a forecasted drop of 11 points in Q3 2025.

Several factors contribute to this downturn, including chronic labor shortages and rising costs affecting transport capacity. The surge in overall prices has dampened consumer spending, while escalating construction costs have led to a decrease in new housing starts and public works projects, restricting the recovery of logistics demand.

Additionally, companies are experiencing increasing operational burdens. In the past 12 months, logistics costs as a percentage of sales have risen across all industries. Notably, the food and beverage wholesale sector saw an increase from 5.7% in 2023 to 9.1% in 2024. This rise is attributed partially to soaring electricity and energy prices impacting warehouse operating costs, indicating that price adjustments by logistics providers are occurring.

Supply Trends and Rent Dynamics

The nominal rents are on an upward trend, reflecting construction cost increases. In contrast, actual contracted rents have shown a downward trajectory, exacerbated by the provision of rent-free periods to attract tenants, particularly in oversupplied submarkets. This has led to a widening gap between nominal and real rents.

On the brighter side, several projects, including MFLP Yokohama Shin-Koyasu, MFLP Tsukuba Mirai, GLP Yachiyo V, Landport Yokohama Sugita, and ESR Kawanishi DC2, have reached full occupancy or solved vacancy issues, indicating that the market is not entirely stagnant, as a gradual demand trend continues.

For tenant companies, securing talent and improving employee retention remain critical concerns. Functional and convenient facility locations are vital evaluation criteria for site selection. In existing properties, rising construction, maintenance, and repair costs have led to some landlords implementing rent increases, albeit limited, influenced by market conditions.

Although tenants express some understanding of the recent price increases, the slow pace of logistics activity, heightened cost awareness, and high vacancy rates in certain submarkets affect negotiations on rent adjustments, resulting in a cautious approach on a case-by-case basis.

Future Outlook

The report anticipates a limited supply of new logistics facilities in the metropolitan areas during the second half of 2025. This supply constraint is expected to naturally improve the current loose supply-demand balance over the medium to long term, possibly reducing the prevalence of rent-free periods.

Furthermore, some tenant companies may adopt a wait-and-see approach regarding the implications of Trump tariffs, which may delay improvements in the market balance. Continuous monitoring of how tariffs affect supply chain structures is essential.

If the yen appreciates, risks of reduced exports may emerge; however, it could also potentially curb inflation due to lower import prices, positively influencing logistics activities.

For more detailed information, the full report is available for download in PDF format.
For the English version and other market insights, visit Cushman & Wakefield's official site: www.cushmanwakefield.com.

Cushman & Wakefield remains one of the leading firms in commercial real estate services, with operations in 60 countries and renowned for its innovative corporate culture.