Tokyo Grade A office rents rise for the fifth straight quarter in Q1

Rents increased by 4.9% by the end of the quarter.

In a recent report, JLL revealed that rents in Tokyo’s Grade A office market averaged JPY 35,520 per tsubo, per month, up 1.4% q-o-q and 4.9% y-o-y by end-Q1 2025. Both Akasaka/Roppongi and Otemachi/Marunouchi sub-markets showed growth in rents.

“Capital values in Q1 2025 were up 3.0% q-o-q and 8.3% y-o-y, supported by the continual rise in rents and unchanged cap rates from the previous quarter. One notable transaction was the acquisition of Otemachi One Tower by Nippon Life Insurance Company,” the report added.

Here’s more from JLL:

According to the Tankan Survey in March, the diffusion index of large manufacturers fell 2 points to 12, which marked the first decline in four quarters. The index of large non-manufacturers rose 2 points to 35 due to inbound demand.​

Net absorption in the Grade A office market in Tokyo was 370,000 sqm in Q1 2025. By industry, the figure was driven by services, information & communications, transport & postal services and manufacturing.

Vacancy rate falls further

Five new Grade A office buildings were completed in Q1 2025.

Tokyo’s vacancy rate in the Grade A office market in Q1 averaged 2.5% and fell 30 bps q-o-q and 170 bps y-o-y. By submarket, the vacancy rate continued to go down in both Otemachi/Marunouchi and Akasaka/Roppongi sub-markets, particularly in the latter.

Outlook: Rents and capital values projected to further increase

According to Oxford Economics’ forecast as of March 2025, the GDP growth for year-end 2025 is 1.0% and the CPI is 2.7%. Risks include the impact of tariffs on corporate activity and office demand.

Leasing volumes are set to exceed this year’s levels, driven by solid supply and robust tenant demand. Capital values are expected to rise as rent increases counterbalance potential cap rate shifts. Cap rates should stay stable.