Japan logistics market poised for sustained momentum

Supply constraints are expected to support rental growth.

Japan’s logistics sector is poised for continued growth, supported by strong demand and a tightening supply pipeline, according to Savills.

Savills reports that vacancy in Greater Tokyo declined in 2H 2025 for the first time since 2020, while Greater Osaka absorbed new supply with only a modest increase in vacancy. Demand is expected to remain robust across both markets.

Looking ahead, Savills notes that new supply is projected to decline nationwide due to rising construction and land costs, as well as labour shortages, which should further tighten market conditions.

The firm also highlights structural shifts across the sector, with operators accelerating automation and digitalisation to address labour constraints. Modern facilities are increasingly designed for efficiency, incorporating multi-tenant layouts, advanced systems and worker-focused amenities.

At the same time, government initiatives to introduce autonomous freight transport are progressing, with limited operations targeted from 2027.

Savills expects rising development costs to place upward pressure on rents, with increases likely to be passed through the supply chain. Despite higher operating costs, the sector is expected to remain resilient, supported by inflationary conditions and sustained occupier demand.

Overall, Savills emphasises that declining supply and ongoing operational reforms position Japan’s logistics sector for sustained momentum in the years ahead.