Tokyo industrial demand reaches over 803,000sqm in H1 2024

Net absorption in Q2 alone was at 641,000sqm.

Strong demand from 3PLs and online retailers, coupled with major new supply, pushed net absorption in Tokyo’s prime logistics market to reach a robust 641,000 sqm in Q2 2024, according to a JLL report. 

For H1 2024, the figure was more than 803,000 sqm.

Here’s more from JLL:

New supply totalled 608,000 sqm in Q2 2024, increasing the total stock by 3% q-o-q and 11% y-o-y. Six facilities, including Yokohama Fukuura Logistics Center in the Bay Area and Prologis Park Koga 5 in the Inland Area, entered the market.

The vacancy rate in Greater Tokyo stood at 9.6% for Q2 2024, decreasing 40 bps q-o-q and increasing 230 bps y-o-y. The vacancy rate in the Bay Area fell to 8.2%, decreasing 70 bps q-o-q, while Tokyo Inland fell to 10.2%, decreasing 30 bps q-o-q.

Average rents grow moderately

Gross rents in Greater Tokyo averaged JPY 4,638 per tsubo, per month in Q2 2024, remaining flat q-o-q and increasing 2.0% y-o-y. The Bay Area and the Inland Area have both increased by 0.2% q-o-q, reflecting new completions with higher rents.

Capital values in Greater Tokyo remained flat q-o-q and increased 1.6% y-o-y in Q2 2024, reflecting moderate rent growth. A notable sales transaction involved KDX Realty Investment Corporation acquiring KDX Logistics Ebina Chuo for JPY 5.0 billion.

Outlook: Rents to remain stable but cap rates to compress

According to Oxford Economics, in 2024, industrial production is expected to fall 1.4% and exports are likely to rise 0.3%, while imports are likely to fall 0.3%. Downside risks include the impact of the slowdown in global economies.

Amid sustained strong demand, overall rents are expected to grow fairly well; however, given the huge volume of supply, rents are likely to feel downward pressure in some submarkets. Cap rates may compress further amid continued investor interest.

Note: Tokyo Industrial refers to the Greater Tokyo prime logistics market.