Strong net absorption is seen due to unwavering demand for office from headcount increases and business expansions

• ​​According to the Tankan Survey in September, the diffusion index of large manufacturers rose 1 point to 14. The index of large non-manufacturers was unchanged at 34.​
• Strong demand for office is seen in central Tokyo due to business expansion and increase in headcount. Net absorption for Tokyo Grade A office was 204,590 sqm in Q3 2025. By industry, the figure was driven by information services, manufacturing, and medical services.
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Notable drop in vacancy rates

• One new Grade A office building was completed in Q3 2025. Tokyo’s vacancy rate in the Grade A office market in Q3 2025 averaged 0.9%, falling 160 bps q-o-q and 230 bps y-o-y. fell.
• Almost no vacancies left in Otemachi/Marunouchi submarket and a 140 bps compression was seen in Akasaka/Roppongi submarkets.

Rents rise for a seventh consecutive quarter

• Rents in Tokyo’s Grade A office market averaged JPY 37,042 per tsubo, per month, up 2.4% q-o-q and 7.5% y-o-y by end Q3 2025. Rents in both Akasaka/Roppongi and Otemachi/Marunouchi submarkets rose as landlord-favourable market conditions continue due to tight supply and demand.
• Capital values in Q3 were up 4.2% q-o-q and 12.9% y-o-y as rents were higher and cap rates remained unchanged from the previous quarter. Notable Grade A office transactions announced this quarter included a partial stake of Gran Tokyo South Tower (strata title) by JR East Real Estate Asset Management Co. Ltd.

Outlook: Further upgrade in rent and capital value projections

• According to Oxford Economics’ forecast as of September 2025, the year-end 2025 GDP growth has been revised upward to 1.0% and the CPI to 3.2%. Risks include impact of tariffs, heightened inflation from Sanaenomics and a downturn in overseas economies.
• Leasing volume is expected to slow down in the next year as new supply is slightly lower, however, office demand remains very robust. Capital values are projected to continue to rise next year with rents increasing and further compression in cap rates.