Relocation demand driven by talent considerations expanded from large corporations to mid-sized and small companies

• Osaka’s Grade A office market started 2026 strongly, with net absorption totalling 7,000 tsubo in Q1 2026.
• There was no significant concentration among tenants that relocated, with a wide range of sectors represented, including long-established manufacturers, wholesalers and IT companies.

The quarter saw no new supply and continued take-up in existing premises

• There was no new supply delivered during the quarter. Yodoyabashi Gate Tower, which completed last quarter with a GFA of 40,000 tsubo and 29 storeys, has made steady progress in leasing.
• The Q1 2026 vacancy rate fell to 2.2%, down 0.9 pp both q-o-q and y-o-y. Buildings completed after 2024, which previously had available space, are now seeing their total vacancy significantly reduced, indicating tighter market conditions.

Rents reached JPY 27,104 per tsubo per month, up 3.0% q-o-q and 13.9% y-o-y

• The average monthly gross rent per tsubo was JPY 27,104, up 3.0% q-o-q and 13.9% y-o-y, marking the first time annual rental growth has exceeded 13% since tracking began in 2003. Rises in rents at top-tier buildings are driving the overall increase.
• Capital values rose 2.9% q-o-q and 14.6% y-o-y in Q1, driven by rising rents. Notable transactions announced in the quarter included Meiji Yasuda Life Insurance’s acquisition of Hulic Osaka Building. The buyer is planning to rebuild the acquired building.

Outlook: Leasing market remains tight, with the only new supply due July 2026 expected to be fully leased on completion

• According to Oxford Economics forecasts as of March 2026, Osaka City’s real GDP growth is projected at +0.5% in 2026. The vacancy rate is expected to continue declining. With future new supply scheduled to be extremely limited, the only building due for completion in July 2026 is notable. Tenant demand remains strong, and it is expected to be fully let shortly after completion.
• Therefore, the vacancy rate at end Q4 2026 is forecast to decline to 2.0%. Vacancies in top-tier buildings are getting scarce in earnest. With available floor space becoming limited, the upward trend in rents is continuing, and the annual rental growth rate for 2026 is projected to be around 10%.