#Japan #Tokyo #Sanko Estate #Office Rent Index

Overview of the Office Rent Index Q2 2025

Sanko Estate Co., Ltd., led by President Masajiro Fukushima, has released the Office Rent Index for the second quarter of 2025, developed in collaboration with the NLI Research Institute, headed by President Tsuneaki Tejima. The report demonstrates a continued upward trend in office rents across Tokyo's central areas.

Key Findings from Q2 2025:

• - Class A Buildings: Rental rates have seen a steady increase for seven consecutive quarters, reaching 30,563 yen per tsubo (excluding common service fees), which is up by 54 yen compared to the previous period.
• - Class B Buildings: The rental rate has recovered to the pre-pandemic level of 22,291 yen per tsubo, marking a significant recovery since Q4 2019.
• - Class C Buildings: The rental rate stands at 19,042 yen per tsubo, recovering to levels not seen since Q2 2020.

Detailed Analysis of Rental Trends

Class A Buildings:

For Class A buildings in downtown Tokyo, the rental growth reflects increasing demand among foreign corporations and trading firms, which have absorbed large amounts of vacant office space. The vacancy rate dropped significantly to 2.3%, down 3.8 percentage points from the previous quarter, which is below 3% for the first time since Q2 2021. Despite the ongoing demand for office spaces, new supply in Q2 and Q3 of 2025 remains low, which is expected to tighten the supply-demand balance further.

Class B Buildings:

The rental rates for Class B buildings climbed 2,250 yen to 22,291 yen per tsubo, reaching the highest point since 2019 Q4. With a vacancy rate falling to 2.2%, there has been notable activity in locations like Minato and Shinjuku, where businesses are expanding their operations. This segment has also experienced a reduction in vacancies for seven consecutive quarters, nearing the 1% mark.

Class C Buildings:

The rental rates for Class C buildings have risen by 118 yen to 19,042 yen per tsubo, marking a slow but steady growth trend. The vacancy rate has similarly improved, now resting at 2.6%, reflecting a decline since peaking at 5% in Q3 2022. The improvement is largely attributed to the absorption of vacant spaces in newly constructed properties.

Year-On-Year Change and Market Dynamics

When compared year-on-year, rental rates for Class A buildings rose by 14.1%, while Class B buildings saw a 15.5% increase. Class C recorded a modest increase of 2.9%. These trends underline a consistent upward trajectory, particularly impressive for Classes A and B, both of which have achieved increases over seven consecutive quarterly periods.

Conclusion

As we observe the recovery of the Tokyo office market, Sanko Estate continues to play a pivotal role in supporting office strategies for enterprises. Founded on May 17, 1977, Sanko Estate specializes in providing comprehensive support for various office needs—from validating and proposing optimal workspaces to assisting in the selection and brokerage of rental buildings. For further details and insights into these trends, please visit Sanko Estate's Website.

Note: While this release aims to provide accurate information, Sanko Estate encourages readers to consider the details at their own discretion and responsibility.