Tokyo retail rents decline by 3.4% over the past half year

More expensive prime units are being taken off the market.

According to the semi-annual survey conducted by the Japan Real Estate Institute (JREI) and BAC Urban Projects, average asking rents for 1F units in Tokyo have declined by 3.4% half-year-on-half-year (HoH) and 3.5% year-on-year (YoY). 

In a report, Savills added that non-1F average asking rents experienced a more modest decline of 1.5% HoH and 2.4% YoY. This trend is mostly attributed to more expensive prime units being taken off the market, reflecting the overall strength of the retail sector. 

Here’s more from Savills:

The retail sector has continued its path of robust growth, bolstered by the expansion in the number of inbound tourists. According to Japan National Tourism Organization (JNTO), the number of tourist arrivals in 2024 has exceeded those of 2019 in every month to date. Rents are strengthening particularly in prime areas, while vacancies are tightening overall. Some major department stores have been reporting record-high profits in consecutive years. 

As of August 2024, there are about 38% fewer Japanese travellers going overseas compared to the same period in 2019, adding further purchasing power. The growth of inbound tourism, coupled with sound domestic consumption supported by strong wage growth has fuelled a positive retail market outlook. 

While luxury brands have maintained strong sales performances since the pandemic, various other types of products such as sportswear and outdoor brands are emerging. In areas such as Shibuya, where the market for luxury brands is comparatively limited, second-hand stores with high-end goods, and pop culture merchandise stores are attracting both domestic and foreign customers. That said, while units in prime areas are in high demand, peripheral streets continue to face challenges in drawing demand.