Robust occupier demand lifts Tokyo Q1 office absorption

Absorption increased to 69,000 tsubo during the quarter.

Tokyo's Grade A office market recorded net absorption of 69,000 tsubo in Q1 2026, up from 38,000 tsubo in the previous quarter, as occupier demand remained robust, according to JLL.

The consultancy said demand was supported by employees returning to workplaces and business expansion across the manufacturing, IT and professional services sectors.

Four Grade A office projects were completed during the quarter, including Tofrom Yaesu Tower, Takanawa Gateway City The Linkpillar 2, Sumitomo Fudosan Shiba Koen and Omotesando Grid Tower, increasing total office stock by 3.5%. Despite the influx of supply, vacancy remained unchanged at 0.7%, down 1.8 percentage points from a year earlier.

Average monthly gross rents rose for a ninth consecutive quarter, increasing 5.2% quarter-on-quarter and 13.2% year-on-year to JPY40,247 per tsubo. Capital values climbed 5.5% during the quarter as rental growth continued to offset rising capitalisation rates.

JLL highlighted Brookfield's JPY300 billion acquisition of the Dentsu HQ Building as one of the market's most notable transactions.

Looking ahead, JLL said tenant demand remains solid and construction delays caused by labour shortages and rising costs are tightening supply conditions, supporting expectations for further rental growth despite broader economic risks linked to geopolitical tensions in the Middle East.