Strong demand from new office setups and expansion relocations, though limited availability may be constraining take-up

• Net absorption totalled +3,600 tsubo in Q2 2026.
• Limited Grade A availability is pushing tenants toward alternative strategies: remaining in current offices, renovating, or using flexible workspaces.

Vacancy rate falls to 1.8%, highlighting an increasingly tight market

• There are virtually no vacancies that match relocation demand. Traditionally, smaller spaces commanded higher per-tsubo rents, but this has reversed—premium pricing now applies to large spaces of 500+ tsubo.
• Q2 2026 vacancy rate fell to 1.8%, down 0.4 pp q-o-q and down 1.5pp y-o-y. The quarter saw no new supply, and the absorption of vacancies at Yodoyabashi Gate Tower and Grand Front Osaka Tower B primarily contributed to the decline in the vacancy rate.

Average monthly rent per tsubo reaches JPY 28,083, up 3.6% q-o-q and 14.1% y-o-y

• Rents averaged JPY 28,083 per tsubo per month, up 3.6% q-o-q and 14.1% y-o-y. Landlords have maintained the upper hand, with even those with vacancies not rushing to close deals but rather taking their time to aim for contracts at higher rents.
• On the other hand, rapid rent increases are creating new challenges. There is a perception gap between tenants’ budget expectations and the rent levels landlords anticipate. In fact, some buildings have experienced a decline in inquiries after raising asking rents. Capital values increased by 5.6% q-o-q and 16.0% y-o-y in Q2 2026, driven by rising rents.

Outlook: The leasing market remains tight

• The only new supply planned through 2030 is the “Taisei Midosuji Tower” (Chuo-ku, total floor area approximately 14,000 tsubo), scheduled for completion in July 2026, and the market is expected to remain extremely tight.
• Grade A office space is becoming genuinely scarce. As available floor decreases, rents continue their upward trajectory, with annual rental growth for 2026 forecast at approximately 12%.