Regional Japanese office deals rise despite overall investment dip

Osaka and Sapporo are driving market momentum.

Japan’s office investment market continued to show steady demand in the second half of 2025, even as total investment volumes declined compared with last year, according to a bi-annual survey by the Japan Real Estate Institute and data from MSCI.

The survey, conducted in October 2025, found that expected capitalization (cap) rates in most regional markets remained flat on both a half-year and annual basis. Exceptions were Osaka and Sapporo, where cap rates tightened by 10 basis points over the year, signaling growing investor confidence in these cities.

Nationwide, total investment volume as of Q3/2025 was approximately 11% lower than the same period in 2024. However, office transactions rose around 7% year-on-year, highlighting continued demand for office assets despite broader market caution. Analysts noted that these figures are preliminary and expected to increase as additional transactions are recorded.

According to a Savills report, several high-profile office deals were completed in the second half of 2025. In Sapporo, Heiwa Real Estate acquired part of the Odori-Nishi 4 South District Category I Urban Redevelopment Project for roughly JPY120 billion. The mixed-use development will include office, retail, and hotel space.

In Osaka, Mitsubishi UFJ Financial Group purchased the Osaka Dojimahama Tower, another mixed-use office, retail, and hotel property, for over JPY100 billion. Meanwhile, in Yokohama, Nissan Motors sold its global headquarters for JPY97 billion to a KKR-managed entity and simultaneously entered a 20-year leaseback arrangement.

Savills said these transactions reflect ongoing interest in prime office assets across Japan, particularly mixed-use developments, as investors seek long-term, stable returns amid a slowly shifting market.