Investment-grade office rents in regional Japan record strong growth in H1

Osaka saw the strongest rental growth of 5.5%.

According to a Savills report, Japan’s regional office markets have maintained a positive momentum over the past half year. Continued strong corporate performance, reflected by a 3.8% YoY increase in quarterly recurring profits in Q1/2025, demonstrates growing domestic demand and suggests continued resilience.

“The prevailing optimism among businesses is expected to support further expansion in regional office markets,” the report said.

Here’s more from Savills:

Persistent shortages of skilled labour are prompting companies to expand and upgrade office spaces with enhanced amenities to support employee wellbeing and improve talent attraction and retention. In addition, the flexible work model has gained a foothold, and demand for modern office features such as private booths, additional meeting rooms, and flexible seating has been on the rise.

Regional investment-grade office markets experience strong growth over the past-half year. Osaka, Fukuoka, and Nagoya recorded rental growth of 5.5% HoH, 3.4% HoH and 1.4% HoH, respectively. Investment-grade vacancy also saw solid improvements in Nagoya and Osaka, tightening by 2.5ppts HoH and 1.3ppts HoH, respectively. Meanwhile, investment-grade vacancy in Fukuoka rose by 1.2ppts HoH, primarily driven by a large new completion.

The all-grade office market continues to show promising prospects, with all markets recording rental growth on both a half-yearly and annual basis. Sapporo saw the largest rental growth of 2.5% HoH. Vacancies also continue to compress across all markets apart from Sapporo, which saw vacancy rising by a modest 0.9ppts HoH.