Tokyo retail rents rise amidst severe supply constraints

Rents increased by 9.6% YoY in Q1.

Prime retail rents in Tokyo continued to climb in the first quarter of 2026 despite moderating luxury demand, supported by limited availability and ongoing retailer competition for flagship locations, according to JLL.

The consultancy reported that luxury sales increased 20% year-on-year during January and February, while inbound tourism spending rose 3% year-on-year in the first quarter. Foreign visitor arrivals increased modestly despite a sharp decline in arrivals from China.

Notable openings during the quarter included a new global flagship store by Jins on Ginza's Chuo-dori and a flagship outlet by outdoor brand Millet in Omotesando.

No new supply entered Tokyo's prime retail market during the quarter. JLL highlighted the completion of a repositioning project at Ginza Novo, formerly Tokyu Plaza Ginza, where part of the food and beverage space was converted into a nightclub following a change in ownership.

Prime retail rents reached JPY109,179 per tsubo per month, increasing 4.8% quarter-on-quarter and 9.6% year-on-year. According to JLL, demand from casual apparel brands and retailers seeking highly visible locations continued to underpin leasing activity despite softer luxury expansion.

Capital values rose 5.0% quarter-on-quarter and 8.1% year-on-year, supported by rental growth and stable capitalisation rates. No significant prime retail investment transactions were recorded during the quarter.

Looking ahead, JLL expects rents to continue increasing, albeit at a slower pace, as supply remains extremely limited. While weaker consumer sentiment could weigh on spending, demand for prime locations is expected to remain strong, supporting further gradual growth in capital values.