A look at the transformation of Japan’s major regional cities.
Overall, demand in the office markets in Japan looks to have plateaued for now, with contracted rents remaining flattish or weakening slightly. The office market is still suffering somewhat from the effects of the pandemic and is adjusting to the post-Covid world. That said, Osaka welcomed the new Umeda Twin Towers South in Umeda, the prime office area, which has set a new high for rents in the city, demonstrating the presence of sound demand for premium buildings. It’s opened with about 85% occupancy despite its high rents of JPY38,000 per tsubo (10% higher than the previous top rent; a tsubo is a Japanese unit of area equal to approximately 3.31 sq m). Hence, the Osaka market presently appears to have sound demand even for very expensive office floors. More buildings will follow in 2024 and transform the landscape of Umeda, the gateway in western Japan.
“While there is concern over the large number of high-quality buildings to be added at the same time, the economy still has two years to recover and grow”
