In full-year 2024, new supply totaled 270,000 sqm, marking the largest figure

• The December Tankan Survey for Greater Osaka showed that business sentiment fell to 13 points from 14 for large manufacturers and to 28 points from 33 for large non-manufacturers. However, net absorption totalled +96,000 sqm in Q4, and further reached +210,000 sqm for the full year, marking the largest figure.
• A wave of headquarter relocations was seen among major manufacturers with high cost awareness as part of corporate reform. Relocation demand seemed to become apparent, driven by companies forced to postpone building new workplaces in a tight supply-demand market just prior to the COVID-19 era.

Net absorption amounted to +210,000 sqm, also the record high. Solid demand curb rise of vacancy rate surge

• The new completion in Q4 was Grand Green Osaka, a mixed-use development covering offices, hotels, an open innovation facility, commercial facilities, parks and residential areas in 320,000 sqm of GFA.
• The Q4 vacancy rate rose to 4.4%, an increase of 60 bps q-o-q and 190 bps y-o-y despite the largest yearly supply amount. Robust absorption of vacancies was seen in new completions, as well as existing buildings, driven by consolidation in line with business expansion and improvements in location.

Talent focus was a key driver of relocation for buildings to superior locations and better grades, in line with business expansion

• The average monthly gross rent per tsubo was JPY 23,408, an increase of 2.1 % q-o-q and 4.0 % y-o-y.
• New completions with higher rents pushed up the market average, as did upward rent revisions in existing buildings with high occupancy rates.

Outlook: Expected projects remain large in 2025 but fewer; solid demand expected

• Oxford Economics predicted in December that Osaka City’s real GDP was projected to grow by 0.1% in 2024 and 0.4% in 2025. In the rental market, while 2025 will see substantial new supply with two buildings, demand for new buildings with better and favorable specifications for workers remains solid due to the rise in companies’ interest in talent.
• The rise in vacancy rates is expected to be modest, as this trend is likely to continue. In the investment market, the 2024 yearly investment volume in Greater Osaka exceeded JPY 1 trillion. Office deals were brisk and of row-level yields were seen. While solid appetites seem set to continue in 2025, the deal volume is expected to fall due to a rebound from 2024 decreasing sales assets.