Guess which area in Tokyo has the lowest office vacancy rate
Its vacancy rate contracted 0.1ppts to 1.5% in Q2.
According to a Savills report, Shibuya’s vacancy contracted 0.1ppts QoQ to 1.5%, becoming the ward with the lowest vacancy rate in the central five wards (C5W) for the second quarter running.
Rents have seen the most gentle decline this quarter, dipping 0.7% QoQ to JPY35,333 per tsubo. It is still clearly the second most expensive ward in the C5W, with a notable gap between first place Chiyoda and third place Chuo.
Here’s more from Savills:
Shibuya experienced the largest decline in rents at the start of the pandemic, contracting by 9.9% YoY in Q2/2021, due to its large pool of tenants in the IT industry that were quick to implement remote work policies and reduce their office space requirements.
However, rents appear to have stabilised over the past year, especially when compared to other wards. Its annual rental decline of 2.4% was less than half of that of Minato, the ward with the second largest decline. Indeed, the corrections that the ward has seen appear to have helped it regain popularity and maintain low vacancy rates.
Overall, Shibuya is performing well as a submarket. In particular, Grade A offices located in the vicinity of Shibuya station appear to be doing exceptionally well, and are currently all fully occupied. Indeed, Shibuya station is a key terminal train station that can be conveniently accessed from surrounding areas, and this strength will remain a key foundation for upcoming developments in the market, including the Sakuragaoka Redevelopment Project that will come to the market within the next year and looks to be making good progress this year.