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Tokyo Prime Office Rents to Dip in 2018 From New Supply Added

Tokyo Prime Office Rents to Dip in 2018 From New Supply Added

According to CBRE's newly released 2018 Japan Real Estate Market Outlook, due to a new supply of Class A office space coming on the market, rental rates in Tokyo will see a correction in 2018.

CBRE reports office rents are set to fall for Tokyo Grade A buildings, but will continue to rise in regional cities. New supply in Tokyo will average 233,000 tsubo in 2018 and 2019, an increase of almost 30% on the 10-year annual average.

The vacancy rate is thus expected to rise to 4.8% at the end of 2019, 2.7 points higher than at the end of 2017. As a result, rents are likely to decline over the course of 2018, and are forecast to fall by around 8% by the end of 2019.
Meanwhile, future supply will remain limited in regional cities, where supply-demand conditions are already tight. With strong occupier demand also expected to continue, rise in rents is expected to continue in these regional cities.

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