Japan's Office Market to Reach a Tipping Point in 2017
According to global real estate consultant CBRE, Japan's office leasing and investment markets will likely reach a turning point in the cycle in 2017.
In Tokyo's office market, which is scheduled to see three consecutive years of above average new supply from 2018 onwards, occupiers are already becoming more cautious towards leasing space.
CBRE Research expects rents to peak in H2 2017, thereafter shifting to a moderate downward trend. While the Greater Tokyo logistics market continues to see stable demand, plans for new supply remains significant, and has already led to rise in vacancy rates in some areas. These shifts in the leasing market are likely to encourage more investors to take profits on their investments made earlier in the cycle.
Positive stimuli could include US president-elect Donald Trump's expansionary fiscal policy including infrastructure investment and corporate tax cuts.
These are likely to further strengthen the Dollar against the Yen, which would reinvigorate Japanese corporate earnings.
This could then lead to an increase in corporate investment activity as well as demand for offices. The pace of pre-leasing activity for offices slated for completion in Tokyo in the coming quarters will be an important indicator of the market outlook.