Tokyo’s office vacancy rate fell to the lowest level in more than four years in October as demand for space outpaced supply, said broker Miki Shoji Co.
The rate, a measurement of unoccupied space, fell to 7.56 percent last month from 7.9 percent in September and was at its lowest since June 2009, according to data released today by the closely held Tokyo-based company. The 43-member Topix Real Estate Index fell 0.4 percent at the close of trading in Tokyo.
Tokyo’s office market has been recovering since the vacancy rate peaked in June last year amid efforts by Prime Minister Shinzo Abe to revive the world’s third-largest economy. Average office rents in October rose to 16,237 yen ($165) per tsubo, a standard measure of property area in Japan, its first increase since June 2012, the data showed.
The Tokyo office market will improve as vacancies decline and rents increase, albeit at a fairly gradual pace, Kayoko Hirao, head of Japan Research at DTZ, said in a report published Oct. 17.
A Tankan report measuring business sentiment on Oct. 1 showed that confidence among Japan’s large manufacturers at the highest since the early stages of global credit crisis in 2007. The Bank of Japan last month maintained its commitment to unprecedented monetary easing and reiterated its forecast that inflation will almost match its 2 percent target in the year starting April 2015.
“The real market recovery will gather more momentum after the commencement of the new fiscal year when companies are expected to increase capital investment as a reflection of the recent improvement in corporate performance,” DTZ’s Hirao said in the report.
About 24,000 tsubo of space was absorbed in October, according to the Miki Shoji report today. That is 26 percent more than the 19,000 tsubo of space signed in September. A tsubo is 3.3 square meters or 35.5 square feet.