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Tokyo September Office Vacancies Fall to Lowest Since 2009

Tokyo’s office vacancy rate fell in September to the lowest level in four years as the amount of space taken up in the month more than doubled, according to broker Miki Shoji Co.

The rate, a measurement of unoccupied space, fell to 7.9 percent last month from 8.16 percent in August and was at its lowest since October 2009, according to data released today by the closely held Tokyo-based company. The Topix Real Estate Index rose 1.1 percent to its highest closing level since Oct. 1.

Tokyo’s office market is improving amid a return of confidence among Japan’s large businesses as Prime Minister Shinzo Abe introduces extra stimulus to boost the economy ahead of a sales-tax increase scheduled for April. The Bank of Japan has pumped $404 billion into the financial system since April, pushing down the value of the yen, and boosting both exports and the country’s banking industry.

“The vacancy rate was better than I had expected,” said Daisuke Fukushima, a Tokyo-based analyst at Nomura Securities Co. who had predicted the rate would decline to 8 percent. “Economic sentiment is improving and that has had a positive impact on the office market.”

Japan’s large businesses now are the most confident they’ve been since before the collapse of Lehman Brothers Holdings Inc. The Bank of Japan’s quarterly Tankan index for big manufacturers, released Oct. 1, rose to 12 in September from 4 in June, exceeding the median estimate of 7 in a Bloomberg survey.

About 19,000 tsubo of space was absorbed in one month, according to the Miki Shoji report today. That is more than double the 8,400 tsubo of space signed in August, it said. One tsubo, a standard measure of property area in Japan, is 3.3 square meters, or 35.5 square feet.

“We expect the Bank of Japan’s monetary easing to produce the desired effects and look for increases in government spending and public works investment to continue through 2015,” Masahiro Mochizuki, an analyst at Credit Suisse, wrote in a research note Oct. 7. “Under this scenario, strong demand for office space should drive down vacancy rates in Tokyo’s five central wards from now through 2015.”

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