Tokyo adds three projects to prime retail pipeline

They are scheduled for completion in 2027 to 2029.

Tokyo's prime retail market continued to benefit from strong luxury demand in the second quarter of 2026, with rising domestic consumption helping offset a decline in foreign visitor arrivals, according to JLL.

Luxury goods sales at Tokyo department stores remained robust in April and May, while JLL said the rising stock market appeared to have supported domestic consumption despite fewer overseas visitors. Occupier demand from luxury brands remained healthy during Q2, with new openings including Hunting World on Omotesando. F&B operator Smith & Wollensky also opened on an upper floor on Chuo-dori in Ginza.

No new prime retail supply was introduced in Ginza or Omotesando during the quarter. However, three projects were added to the development pipeline: the 1,400 sq m Matsuzawa Building New Construction, scheduled for 2027; the 20,000 sq m Ginza Trade Building Redevelopment Project, due in 2029 along Chuo-dori; and the 1,500 sq m Omotesando I Development Project, scheduled for 2028.

Prime retail rents reached JPY 112,686 per tsubo per month in Q2, increasing 3.2% quarter on quarter and 12.9% year on year. JLL said growth had moderated slightly, although prime locations continued to attract multiple bidders when space became available, even as the wave of new luxury-brand openings has largely run its course.

Capital values rose 3.8% quarter on quarter and 12.2% year on year. Rental growth continued to support capital value appreciation while capitalisation rates remained stable. However, JLL recorded no actual investment transactions in Tokyo's prime retail market during the quarter.

Looking ahead, JLL expects limited availability of prime space to maintain upward pressure on rents, although growth is likely to slow as luxury-brand demand appears to have peaked. Cap rates are expected to remain stable, with capital values forecast to continue rising moderately, primarily supported by rental growth.