Osaka leads Japan’s regional office boom with 2.6% rental growth

All regional office markets recorded rent increases during the second half of 2025.

Japan’s regional office market continued to demonstrate steady growth in the second half of 2025, supported by resilient corporate profits and rising demand for upgraded workspaces, according to a recent report from Savills.

Corporate profits in Q3/2025 rose 19.7% year-on-year (YoY), despite trade tensions and tariff-related uncertainties earlier in the year, highlighting the strength of Japan’s economy amid global headwinds. With business activity expected to strengthen further across regional markets, supported by both local and national initiatives, market sentiment remains positive for continued expansion.

Persistent labour shortages are prompting companies to expand and upgrade office spaces with enhanced amenities designed to attract and retain talent. Staff-only cafeterias with discounted meals, gyms, saunas, and private lounges for informal meetings are becoming more common, giving landlords confidence to raise rents. Meanwhile, the flexible work model continues to gain traction, driving demand for modern workspaces equipped with video conferencing-enabled meeting rooms and private phone booths for hybrid work arrangements.

Regional investment-grade office rents built on the momentum from the first half of 2025, with Nagoya, Osaka, and Fukuoka seeing half-year growth of 3.5%, 2.8%, and 2.5% respectively. Vacancy rates also showed improvement, tightening by 2.9 percentage points (ppts) in Fukuoka, 1.1 ppts in Nagoya, and 0.4 ppts in Osaka.

The all-grade office market mirrored this trend, with rental growth recorded across all markets on both a half-year and annual basis. Osaka led growth among all markets with a 2.6% HoH increase in rents. Vacancy rates continued to tighten in most cities, apart from Sapporo, which experienced a slight rise of 0.4 ppts.

Savills said these trends suggest that Japan’s regional office markets are on a positive trajectory, with landlords increasingly able to leverage amenity-rich spaces and flexible work offerings to attract long-term tenants.