Smaller residential units record the largest rental increase in Tokyo

Rents for units with 15-30 sqm grew by 2.5% in Q3.

According to a Savills report, Tokyo’s rental market is principally made up of compact single-occupier units, typically less than 45 sq m (13.6 tsubo) in size. Such units can often make up as much as 70% or more of the 23W area’s rental listings. 

“Unlike Western global cities such as New York and London, house or apartment sharing does not form a major segment of the rental market. As a result, there is a large, stable market for small- to mid-sized units,” the report said. 

Here’s more from Savills:

Average rents for the smaller 15-30 sq m size band in the C5W saw the largest increase, climbing by 2.5% QoQ. The medium 30-45 sq m size band saw marginal growth of 0.6% QoQ. While the larger 45-60 sq m size band continues to command a noticeable average rental premium over its smaller counterparts, it has experienced a slight contraction of 0.3% QoQ. 

Interestingly, average rents for the smaller 15-30 sq m units have surpassed those of the medium 30-45 sq m units in this quarter, reversing the premium that the latter had predominantly maintained since the start of the pandemic. 

Additionally, the proportion of units available in the 15-30 sq m has decreased compared to 30-45 sq m and 45-60 sq m, which is likely a sign of greater demand for smaller units in the C5W. Most companies appear to mandate at least some level of office attendance, and even some major corporations have recently announced scaling back flexible work options. Under this environment, more young professionals are likely to prioritise living closer to their offices in city centres over larger unit sizes.