#Japan #Tokyo #Office Rent #Sanko Estate

Office Rent Index Q1 2025

On April 30, 2025, Sanko Estate Co., Ltd. announced its latest report on the Office Rent Index in collaboration with the Nissay Research Institute. This comprehensive market analysis focuses on rental trends in central Tokyo's office buildings, revealing significant upward movements across different classifications of commercial spaces.

Latest Trends in A-Class Offices

In the first quarter of 2025, rental prices for A-Class buildings in central Tokyo reached 30,509 yen per tsubo (excluding maintenance fees), marking a notable increase of 2,020 yen per tsubo compared to the previous quarter. This recovery to levels last seen in Q4 2021 reflects a consistent upward trend, with six consecutive quarters of rental growth. Year-on-year, this segment has experienced a 4% increase as well.

Interestingly, the vacancy rate for A-Class buildings rose to 6.1%, an increase of 0.4 points over the previous quarter, after two consecutive declines. Forecasts suggest that around 147,000 tsubos of new A-Class space will be delivered throughout 2025, with significant supply concentrated in the first quarter. The completion of several new buildings with unoccupied spaces has contributed to this rise in vacancy rates. However, active office demand persists, with negotiations for leases progressing among newly built structures, indicating that vacancy rates might improve in the near future.

Shifts in B-Class Office Rentals

Looking at B-Class buildings, the rental rates have seen a slight decline, settling at 20,041 yen per tsubo after a decrease of 663 yen compared to the previous quarter. Despite this drop, the segment has shown a year-on-year increase over the last six quarters, suggesting that the base for B-Class office leases is stabilizing.

On the other hand, the vacancy rate for B-Class buildings decreased to 2.5%, down 0.4 points from the previous quarter, marking a continuing downward trend that has persisted for six consecutive quarters. Notably, larger lease agreements have been observed in buildings with slightly less favorable locations, due to the ever-expanding demand in office spaces. This trend indicates that properties with excellent transport accessibility are experiencing a scarcity of available leasing opportunities.

Insights on C-Class Office Spaces

For C-Class offices, the rental rates increased by 821 yen to 18,924 yen per tsubo, continuing a gentle upward trend that has lasted for two consecutive quarters. The vacancy rate decreased to 3.1%, down 0.3 points from the prior quarter. This reduction suggests a healthy absorption of vacant space centered around areas such as Chiyoda and Minato. With the C-Class vacancy rate on a downward trajectory since peaking at 5.0% in Q3 2022, the rate is on the verge of slipping below 2% for the first time since Q4 2020.

Year-Over-Year Comparisons

In terms of year-on-year changes, comparing Q1 2025 to Q1 2024 showcases notable variances across building classes: A-Class offices surged by 20.3%, B-Class increased modestly by 0.6%, and C-Class climbed by 2.9%. This pattern indicates sustained growth in rental prices, especially for A-Class properties, which have consistently increased for four consecutive quarters.

About Sanko Estate Co., Ltd.

Established on May 17, 1977, Sanko Estate Co., Ltd. specializes in providing extensive support for corporate office strategies. The company offers services ranging from workplace optimization and leasing assistance to project management, fulfilling a wide array of office-related needs. For more information, visit Sanko Estate's official website.

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