Osaka Grade A office vacancy rate increases to 3.1%

The Q1 vacancy rate rose by 60bps q-o-q.

According to JLL, there were three new office completions in Osaka in 1Q24: Midosuji Daibiru Building (GFA 20,000 sqm), Urbannet Midosuji Building (GFA 42,000 sqm) in Chuo-ku in January, and JP Tower Osaka (GFA 227,000 sqm) in Kita-ku in March.

“The 1Q24 vacancy rate rose to 3.1%, an increase of 60 bps q-o-q and a decrease of 60 bps y-o-y. Although spaces in existing buildings continued to be filled, some new completions with vacancies drove up the vacancy rate,” the analyst said.

Here’s more from JLL:

The March Tankan Survey for Greater Osaka showed that business sentiment dropped to 6 points from 13 for large manufacturers and to 30 points from 35 for large non-manufacturers.

Net absorption totalled +95,000 sqm in 1Q24. Robust tenant activity was seen as upgrades, relocations with expansions and in-house expansions drove expanding businesses to fill vacancies.

Rents and capital values increase

Average monthly gross rent per tsubo was JPY 22,620, an increase of 0.5% q-o-q, but decreasing by 0.8% y-o-y in 1Q24. New completions with high rents pushed up the market average.

Capital values increased 1.0% q-o-q but decreased 1.6% y-o-y in 1Q24, due to current rent trends. Cap rates remained stable. A notable transaction was Sekisui House Reit’s disposition of Hommachi Garden City for JPY 44.5 billion. The appraisal NOI yield was 3.4%. The purchaser was not disclosed.

Outlook: Rent increases to be temporary before large supply arrives

According to Oxford Economics forecast as of March, Osaka City’s real GDP is expected to grow by 0.4% in 2024 and by 0.1% in 2025. Downside risks include the effects of the upward trend of raw material prices and labour shortages on the domestic economy.

Although demand is robust, forthcoming new completions with high rents exceeding the market average are likely to have many vacancies due to a scarcity of potential tenants. Therefore, rents are likely to drop as vacancies increase. The investment market is expected to raise liquidity with increased sales activity and investor appetite for competitive assets.

Note: Osaka Office refers to Osaka's 5 Kus Grade A office market.

Also Read

Australian CBD markets record mixed signals for office demand in Q3

Hanoi Grade A office absorption hits 3,000sqm in Q3

Since you're here...

...there are many ways you can work with us to advertise your company and connect to your customers. Our team can help you dight and create an advertising campaign, in print and digital, on this website and in print magazine.

We can also organize a real life or digital event for you and find thought leader speakers as well as industry leaders, who could be your potential partners, to join the event. We also run some awards programmes which give you an opportunity to be recognized for your achievements during the year and you can join this as a participant or a sponsor.

Let us help you drive your business forward with a good partnership!

I want to download the media kit