Tokyo logistics vacancy rises to 7.7% in H1 2024

New supply is expected to be better absorbed towards the second half of the year.

In a report, Savills said the Greater Tokyo logistics market has continued to see significant new supply being added to the market in 1H/2024. While demand was sound, it was outpaced slightly by new supply, leading to another uptick in vacancy at 0.6 percentage point (ppts) over the past half-year and 1.6ppts YoY, reaching 7.7%. 

“That said, 60% of the supply for 2024 has come to the market in the first half of the year, meaning that the market should have an easier time absorbing new supply for the remainder of the year,” the report added.

Here’s more from Savills: 

Average asking rents in the Greater Tokyo market exceeded the previous 2022 record high, strengthening considerably by 4.3% QoQ and 6.6% YoY, reaching JPY4,820 per tsubo. This increment has been driven partly by rising construction costs, and also by a handful of listings of expensive properties in prime locations, namely Tokyo and Southern Saitama. 

Discounting these, market rents have been relatively stable with unnoticeable changes. Rental growth should nonetheless vary by property; prime facilities with desirable amenities will command higher rents with stronger growth, while older and less accessible properties have fewer chances to increase rents, especially with the market loosening in recent quarters. 

In contrast, demand in Greater Osaka slightly outstripped supply in 1H/2024, with vacancy tightening by 0.3ppts HoH while loosening marginally by 0.1ppts YoY to 2.7%. The moderate supply forecast for the rest of the year should point to continued stability in the market in 2024. Due to the market’s balance between demand and supply, rents have contracted 1.4% QoQ while remaining flat YoY at JPY4,180 per tsubo.