Tokyo Grade A office leasing volumes to remain solid in H2

A strong appetite from corporates is driving demand.

According to Oxford Economics’ forecast as of June 2025, the GDP growth for year-end 2025 is 0.8% and the CPI is 2.8%. Risks include the impact of tariffs on corporate activity and a downturn in overseas economies.

A JLL report noted that Tokyo’s office leasing volumes are expected to stay solid in the second half of the year as demand for existing buildings is very robust due to strong appetite from corporates. Capital values are also expected to rise higher as rent increases exceed projections.

Here’s more from JLL:

According to the Tankan Survey in June, the diffusion index of large manufacturers rose 1 point to 13, the first rise in two quarters due to solid recovery in the iron and steel sector. The index of large non-manufacturers fell 1 point to 34 due to inbound demand.​

Strong demand for offices is seen due to headcount increases and flight-to-quality relocations. Net absorption was 30,816 sqm in Q2 2025. By industry, the figure was driven by information services, wholesale and retail trade and professional services.

Rents rise for the sixth consecutive quarter

One new Grade A office building was completed in Q2 2025.

Tokyo’s vacancy rate in the Grade A office market in Q2 averaged 2.4% and fell 10 bps q-o-q and 120 bps y-o-y. By submarket, the vacancy rate for Otemachi/Marunouchi and Akasaka/Roppongi submarkets further compressed, with sub-1% levels seen in the former.

Further decline in vacancy rates with almost no remaining space in Otemachi/Marunouchi

Rents averaged JPY 36,237 per tsubo, per month, up 2.0% q-o-q and 5.9% y-o-y by end Q2 2025. Rents in both Akasaka/Roppongi and Otemachi/Marunouchi submarkets were up as landlord-favourable market conditions continue due to tight supply and demand.

Capital values in Q2 2025 were up 2.9% q-o-q and 9.5% y-o-y, reflecting the continual rise in rents and unchanged cap rates from the previous quarter. A notable transaction announced this quarter was the acquisition of Akasaka Park Building by Mitsubishi Estate.