Here are the major office projects to watch out for in Tokyo in H2
Bulk of the supply will be from Mori Building’s two developments.
2021 and 2022 were relatively quiet years for Tokyo office supply, although according to a Savills report, there were admittedly several notable additions, such as Yaesu Central Tower in the second half of 2022.
Despite contributing to a notable vacancy uptick in Chuo when it first came to the market, Savills says it is now reportedly effectively fully leased with Tokyo Midtown Yaesu’s full opening in spring. Overall, these two years of moderate supply may have been a blessing for the market, as most of the new supply has been absorbed uneventfully despite the pandemic.
Here’s more from Savills:
A large amount of supply is forecast for 2H/2023, especially in the Toranomon area of Minato. Azabudai Hills and Toranomon Hills Station Tower, the two major developments by Mori Building, are leading the bulk supply for the year. Pre-leasing for Toranomon Hills Station Tower appears to be going fairly well, and multiple financial institutions such as Goldman Sachs, PAG, and PIMCO will be taking sizable leases.
However, there were some notable rumoured large-scale cancellations for Azabudai Hills that likely set some targets back. Nonetheless, both projects are rumoured to have rents in the mid-to-high JPY30,000 per tsubo range with approximately 50% pre-leased. It should therefore continue being able to fill space up, although this might take time.
Another large project in 2023 is Sakura Stage Shibuya Tower, which also appears to be more than half pre-leased and should perform well given its stationfront location in the popular Shibuya market.
Overall, major buildings in 2023 have shown reasonably encouraging pre-leasing, meaning that the market should go undisrupted.