Economic Short Comment （3 Aug 2023）
The shrinking trend of Tokyo's office market continues unabated～ The difference with Osaka, Nagoya, and Fukuoka is clear ～～4● Delayed recovery of office market conditions
With the spread of post-Corona movements among companies and consumers, a gradual increase in land prices
can be seen, bringing a bit of brightness to the real estate market. However, the recovery of the office market isnotably slow. Looking at the disclosed data of Miki Shoji, the officevacancy rate clearly shows this trend. The office vacancy rates in【Figure 1】（％）

Tokyo, Osaka, and Nagoya remain high, with hardly any

6downward trend (Figure 1).

5In particular, the office vacancy rate in Tokyo has remained high,4with levels exceeding 6% continuing since the latter half of 2021,

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compared to the pre-Corona levels of around 1%. Similarly, inOsaka and Nagoya, levels around 5% continue, with hardly any
downward trend seen.

Office vacancy rate

7TokyoOsakaNagoya

2
CoronadisasterStart

1019

20

212223（Source）Miki Shoji● Trends in average rent

On the other hand, when looking at the movement of average rent, 【Figure 2】
the view changes slightly. Unlike Tokyo, where rent continues toAverage rent

（2020.6=100）

105

fall, in Osaka and Nagoya, rents are flat or on the rise (Figure 2). In
particular, Nagoya has seen almost no downturn due to the Corona100

disaster, and the situation remains strong at the moment. It'sdifficult to judge the market conditions in Nagoya, where "officevacancy rates are flat, and average rents are rising," but given the95

CoronadisasterStart90TokyoOsakaNagoya

rising rents, demand can at least be considered strong. On thispoint, Tokyo continues to see falling rents, making it hard to85

evaluate positively.

（Source）Miki Shoji

1920

212223【Figure 3】● Office market size in each region

Estimated office market size①

Based on the disclosed data from Miki Shoji, the operating floor area

（2020.1＝100）

105(rental area minus vacancy area) is calculated, and by multiplying
this by the average rent, the size of the office market in each region

TokyoNagoya

Osaka

22

23

100

can be estimated.
If we take the market size as of January 2020, before Corona, as 100
and look at the subsequent trend, the differences between regions

9590

become clear. Figure 3 targets major cities such as Tokyo, Osaka,CoronadisasterStartand Nagoya, and Figure 4 compares other cities, but the differences85

in trends between these cities should be clear at a glance.

（Source）Miki Shoji

2021※ The purpose of this document is to provide information and is not intended to solicit product transactions. Additionally, thisdocument has been created based on data deemed reliable by our company, but it does not guarantee accuracy or completeness. Thecontents mentioned in this document are as of the time of writing and may be subject to change without notice in the future.

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For example, while Tokyo continues to show a declining trend, 【Figure 4】

Estimated office market size②

hovering around 87, Osaka and Nagoya show a slight increase in112

recent trends. Furthermore, the trend of market expansion is clear

110

in other cities, with Fukuoka exceeding 110, and Yokohama and108

Sapporo also showing strong performance.

106（2020.1＝100）

SapporoSendaiYokohamaFukuoka

104● The delayed recovery of Tokyo

102

Looking at this, the delayed recovery of Tokyo stands out, and one

100

factor could be the increase in new supply since the Corona98

disaster. Even in a market situation that is not perfect, the increase

Corona disaster
Start

20

21

22

23（Source）Miki Shojiin new supply leads to an oversupply, which cannot be denied.
However, such movement is not only in Tokyo. Despite the supply increase rate in Fukuoka and Yokohama
exceeding that of Tokyo, as shown in Figure 4, the overall market expansion continues.
One point to note here is the movement of company headquarters relocation. As various surveys clearly show,
since the Corona disaster, there has been an increase in companies relocating their headquarters from Tokyo. Inaddition to the deterioration of market conditions due to the Corona disaster, the addition of relocations from Tokyo
may be hindering the recovery of demand. In addition to this, the impact of telework implementation, which iscommon in large cities, should also be noted, especially as recovery is somewhat delayed in Osaka.
Taking these points into consideration, it cannot be judged that Tokyo's office market conditions have entered arecovery phase, and it can be said that it is difficult to be optimistic about the future.
【References】
Resona Research Institute Co.,LtdHideyuki Araki, Chief Economist
hd-araki@rri.co.jp※ The purpose of this document is to provide information and is not intended to solicit product transactions. Additionally, thisdocument has been created based on data deemed reliable by our company, but it does not guarantee accuracy or completeness. The
contents mentioned in this document are as of the time of writing and may be subject to change without notice in the future.

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