Tokyo Bay Area office rents hit new peak amidst strong spillover demand

Prime office rents increased by 18.5% in Q1.

Tokyo’s Bay Area office market is emerging as a key alternative to increasingly constrained core districts, with occupiers turning to high-specification space offering larger floorplates at more competitive rents, according to Savills.

In its latest analysis, Savills noted that scarcity of high-quality office stock in Tokyo’s C5W core has accelerated spillover demand into the Bay Area, particularly from cost-sensitive occupiers, back-office operations, and firms pursuing expansion or consolidation strategies.

As a result, Bay Area Grade A rents rose 9.7% quarter-on-quarter and 18.5% year-on-year to JPY28,436 per tsubo in Q1 2026, surpassing previous 2020 peak levels. Vacancy also tightened further, falling 0.8 percentage points quarter-on-quarter and 4.5 percentage points year-on-year to 1.5%.

Large-scale Grade B offices in the Bay Area recorded even stronger momentum. According to Savills, rents increased 15.3% quarter-on-quarter and 31.7% year-on-year to JPY20,500 per tsubo, also exceeding prior peak levels, while vacancy declined to 1.9%.

Savills said high-specification assets in the Bay Area are expected to continue attracting demand as tight supply conditions persist in core districts, supporting further rental growth and sustained occupancy compression in line with broader C5W market trends.