Japanese logistics spaces' vacancy rates down 6% over the past five years

Vacancies fell from 6.5% in 2015 to 0.6% in Q2 2020.

Over the past five years, owing to solid demand fundamentals, JLL notes that the vacancy rate of Japan logistics properties fell from 6.5% in 2015 to just 0.6% in 2Q20. Moving forward, despite the impact of COVID-19, demand is expected to continue to be robust due to the continued strong growth of e-commerce and the lack of truck drivers and logistics workers, which will likely drive the need for modern logistics facilities. However, moving into 2021 and 2022, the tight vacancy rate is forecast to ease slightly due mainly to a relatively large pipeline of new supply expected to come to market.

Rental overview and expectations

According to JLL, rents for logistics space have risen gradually over the past several years and growth picked up pace in 2019, rising by 1.8% in the 12 months to 2Q20. In the future, rents are expected to rise further for both new and existing supply as the vacancy rate remains tight. Moreover, rising land prices and construction costs are also expected to contribute to the upward pressure on rents, especially for new supply projects.