Tokyo’s bayfront office market rebounds as demand spills over from core districts

The limited availability of large floor plates in the core areas is driving strong absorption in the bay areas.

Tokyo’s prime bayfront office markets are entering a renewed phase of recovery, supported by tightening conditions in the city’s core office districts, according to the latest research from Savills.

As vacancy rates in central areas such as Marunouchi & Otemachi and Nihonbashi & Yaesu approach near-zero levels reminiscent of the pre-pandemic period, Savills observes that tenant demand is increasingly spilling over into nearby bayfront submarkets. These include Harumi (Chuo Ward), Konan, Kaigan and Odaiba (Minato Ward), and Tennozu (Shinagawa Ward), where Grade A office assets are showing clear signs of recovery.

From Pandemic Disruption to Renewed Absorption

According to Savills, bayfront office markets had mirrored the tight vacancy conditions of core districts prior to the pandemic. However, accessibility challenges weighed heavily during the pandemic period, with vacancy rates for both Grade A and large-scale Grade B offices exceeding 30% in some submarkets.

Savills notes that this trend has now reversed. Limited availability of large floor plates in the Central Five Wards (C5W) is driving renewed absorption in bayfront locations. While rental levels remain below pre-pandemic peaks, Savills highlights this as an indication of further upside potential.

Minato Bay Areas Lead the Recovery

Savills reports that Minato’s bay areas—Konan, Kaigan and Odaiba—recorded the earliest recovery among bayfront submarkets. Grade A vacancy declined sharply from a peak of 7.0% in Q3 2022 to just 0.3% in Q4 2025, representing a 1.6 percentage point year-on-year improvement.

This tightening supported rental growth, with average Grade A rents rising 10.2% year-on-year to JPY31,824 per tsubo, according to Savills. Despite the increase, rental levels remain approximately 4% below their Q2 2020 peak, suggesting room for further growth. Savills also notes that top rents in Minato’s bay areas reached JPY40,000 per tsubo as of Q4 2025.

Harumi Records the Sharpest Vacancy Improvement

Harumi emerged as the strongest performer in terms of vacancy recovery in 2025, according to Savills. Grade A vacancy tightened dramatically from a peak of 30.1% in Q4 2023 to 3.2% in Q4 2025, translating into a 20.5 percentage point year-on-year improvement.

Savills reports that average Grade A rents in Harumi increased by 7.1% year-on-year to JPY19,600 per tsubo, while still sitting 11% below their Q2 2020 peak. Top rents exceeded JPY20,000 per tsubo in Q4 2025 and are expected to continue rising amid limited available space.

Tennozu Shows Steady, Sustainable Progress

Tennozu has also demonstrated consistent recovery over the past two years, Savills notes. Grade A vacancy declined from 14.2% in Q2 2023 to 5.8% in Q4 2025, reflecting a 2.8 percentage point year-on-year decrease.

During the same period, average Grade A rents climbed 8.5% year-on-year to JPY18,083 per tsubo, according to Savills, though rents remain around 5% below their pre-pandemic peak in Q2 2020. Top rents in Tennozu reached JPY20,000 per tsubo as of Q4 2025.

Improving Infrastructure Supports Long-Term Competitiveness

Savills highlights that as vacancies in prime offices within adjacent core areas remain scarce, demand is expected to continue flowing into bayfront markets, further tightening vacancies and supporting rental growth.

The firm also points to a shift in market perception toward bayfront locations. Infrastructure upgrades, government-led redevelopment initiatives, and more flexible leasing practices are improving connectivity and competitiveness. Notably, Savills references the Tokyo Bay eSG Project, which aims to transform the bayfront into a green, net-zero emissions district while enhancing transport links to central Tokyo, Haneda Airport, and other key hubs through new subway infrastructure.

As these initiatives progress, Savills expects the bayfront to increasingly establish itself as a viable and competitive office market within Tokyo’s central wards.