Demand from 3PLs and online retailers continues to expand

• 3PL logistics bases are being actively relocated and expanded across Greater Tokyo.
• As rents rise throughout Greater Tokyo, demand is beginning to emerge for relatively lower-rent properties in fringe areas, leading to a reduction in vacant space.

Overall vacancy declines to 8.8%

• New supply totalled 85,000 sqm in Q4 2025, increasing total stock by 0.9% q-o-q. Only one facility entered the market, marking the first time in eight years that new supply has fallen below 100,000 sqm.
• The vacancy rate in Greater Tokyo stood at 8.8% in Q4 2025, down 31 bps q-o-q and 74 bps y-o-y. Vacancy in the Bay Area rose to 8.5%, while Tokyo Inland recorded a decline to 8.9%.

Rental growth trend continues

• Gross rents in Greater Tokyo averaged JPY 4,780 per tsubo per month in Q4 2025, up 1.2% q-o-q and 2.0% y-o-y. Rent increases in prime locations are high, while those in fringe areas are very gradual, creating a polarised picture.
• Capital values in Greater Tokyo rose 0.2% q-o-q and 0.8% y-o-y in Q4 2025, reflecting rental growth. A notable transaction was Blackstone Group’s acquisition of a logistics facility in the Tokyo Prime area.

Outlook: Rents to continue rising; cap rates to edge up slightly

• With continued demand growth and rising construction costs, rents are expected to increase, particularly in prime locations. However, in fringe areas, where vacant space remains high and transportation costs are elevated, rental growth is expected to be very gradual.
• The upward trend in interest rates is expected to continue. However, investment demand from a diverse range of investors remains strong, and yields are projected to rise only gradually. Capital values are expected to increase in tandem with rising rents.