Office consolidation demand from group companies remained active, with notable relocations to newly completed buildings along Umeda and Midosuji

• Osaka’s Grade A office market closed 2025 on a firm footing, with net absorption reaching +34,000 sqm in Q4 2025. Relocation activity was particularly pronounced as group companies consolidated branch and sales offices into prime locations to improve operational efficiency and enhance talent attraction.
• This trend supported the absorption of vacancies in existing buildings.

The completion of Yodoyabashi Gate Tower resulted in a temporary increase in Osaka Grade A vacancy rates to 3.1%

• During the quarter, Yodoyabashi Gate Tower (Chuo-ku; 29 storeys above ground; total floor area of 132,000 sqm) was completed. While leasing progressed steadily, the building opened with vacant spaces, contributing to a q-on-q increase in the vacancy rate of 0.6 percentage points to 3.1% at the end of Q4.
• Despite this short-term increase, the vacancy rate declined by 1.3 percentage points y-on-y, reflecting sustained underlying demand. Average rents reached JPY 26,313 per tsubo per month at the end of Q4, representing a 3.5% q-on-q increase and a 12.4% y-on-y rise. Having surpassed the previous peak of JPY 24,647 recorded in Q2 2020 – the highest level since data collection began in 2003 – rents have now established new records for two consecutive quarters. High-rent lease-ups in Umeda completions continued driving rental growth.

Rent rises for eighth consecutive quarter

• In the investment market, estimated cap rates increased by 5 basis points to 2.95%, reflecting upward pressure from rising long-term interest rates. Nevertheless, pricing rose by 3.1% q-on-q and 16.0% y-on-y, driven by strong rental growth.
• Notable transactions in Q4 included Japan Prime Realty Investment Corporation’s acquisition from Tokyo Tatemono of 4.6% co-ownership interests in Grand Front Osaka’s Umekita Plaza South and North buildings for JPY 9.2 billion and JPY 8.0 billion, respectively, at NOI yields of 4.0% and 4.1%.

Outlook: The rental market remains tight, with rents reaching historical highs for two consecutive quarters

• According to Oxford Economics forecasts as of December 2025, Osaka City’s real GDP growth is projected at +0.3% in 2026 and +0.2% in 2027. Only one Grade A office building is scheduled for completion in Q3 2026 – Honmachi 4-chome Project (Chuo-ku; total floor area of 45,000 sqm; scheduled for completion in July) – with no additional supply expected through 2030.
• Strong leasing activity is expected to drive vacancy rates down to 2.8% by Q4 2026, while rents are forecast to continue setting new records amid tight supply-demand conditions. Despite rising interest rates, capital values are expected to increase in line with rental growth, supporting continued investor interest in Osaka’s office market.