Japan Office Real Estate Market Size (2024 - 2029)

The Japanese office real estate market is experiencing significant changes in its market size due to the impacts of the COVID-19 pandemic, which led to a substantial increase in remote working arrangements. This shift has caused delays and cancellations in office relocations and openings, affecting the overall market dynamics. Despite these challenges, the market is poised for recovery as economic conditions improve, with expectations of reduced vacancy rates in regional cities. The introduction of new Grade A office spaces is set to influence the market size, particularly in cities like Yokohama, Kanazawa, and Fukuoka, where the supply is anticipated to be substantial over the next few years.

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Market Size of Japan Office Real Estate Industry

Japan Office Real Estate Market Summary
Study Period 2019 - 2029
Base Year For Estimation 2023
Forecast Data Period 2024 - 2029
Historical Data Period 2019 - 2022
CAGR 4.00 %
Market Concentration Low

Major Players

Japan Office Real Estate Market Major Players

*Disclaimer: Major Players sorted in no particular order

Japan Office Real Estate Market Analysis

The Japanese office real estate market is expected to register a CAGR of over 4% during the forecast period.

In Japan, the COVID-19 pandemic sparked dramatic shifts in workplace working practices and locations. In reaction to the pandemic, roughly 60% of companies introduced remote working. In the office market, the number of relocations or new openings was placed on hold, delayed, or canceled due to the impact of the pandemic. In October 2021, about 37% of companies used remote work for employees.

  • Through 2022, the vacancy rate for Grade A offices is expected to rise by about 2%.At the same time, about 190,000 tsubos (6,28,900 square meters) of new Grade A office space is expected to be delivered in 2023, making it the second-highest total in history after 2018. The Grade A vacancy rate is expected to reach 3.5% in Q4 2023, up 2.3 percentage points from Q4 2020.
  • As the economy gets better, it is expected that most people will want to work in offices in regional cities in 2022 or 2023, depending on the city. In most regional cities, vacancy rates should begin to drop in 2022. On the other hand, the quantity of new supply is likely to influence the rate of increase. In comparison to other cities, the quantity of additional office space anticipated for completion over the next three years in Yokohama, Kanazawa, and Fukuoka is higher.

Japan Office Real Estate Industry Segmentation

Office real estate is the business of building buildings that companies from different industries can rent or buy. The Japan office real estate market is segmented by key cities (Tokyo, Kyoto, and the rest of Japan). The report offers market size and forecasts for the Japan office real estate market in terms of value (USD billion) for all the above segments. The report also covers the impact of COVID-19 on the market.

By Key Cities
Tokyo
Kyoto
Rest of Japan
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Japan Office Real Estate Market Size Summary

The Japanese office real estate market is poised for growth, with expectations of a steady increase in market size over the forecast period. The COVID-19 pandemic significantly altered workplace dynamics, leading to a surge in remote working practices and a temporary halt in office relocations and openings. Despite these challenges, the market is showing signs of recovery, with a gradual decrease in vacancy rates anticipated as the economy improves. The demand for office space is expected to be driven by the fintech and logistics sectors, which are benefiting from the rise of digital use and e-commerce. However, Japan's startup ecosystem remains underdeveloped compared to other regions, although substantial venture capital investment is supporting its growth. The government is actively working to create a conducive environment for entrepreneurship, which may further influence the office real estate market.

The market landscape is characterized by intense competition among both global and regional players, with major companies like Mitsui Fudosan, Mitsubishi Estate, and Sumitomo Realty & Development leading the charge. These firms are adapting to changing demands by investing in sustainable and flexible office solutions, such as green spaces and hybrid work environments. The market is expected to stabilize by the end of 2022, with companies exploring new opportunities to meet future needs. Notable developments include strategic acquisitions and partnerships aimed at enhancing service offerings and expanding market presence. The focus on sustainability and innovation is evident in projects like the Tokyo Bay ESG Project, which aims to integrate local energy solutions using advanced technology.

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Japan Office Real Estate Market Size - Table of Contents

  1. 1. MARKET INSIGHTS AND DYNAMICS

    1. 1.1 Market Overview

    2. 1.2 Market Drivers

    3. 1.3 Market Restraints

    4. 1.4 Value Chain / Supply Chain Analysis

    5. 1.5 Industry Attractiveness - Porter's Five Forces Analysis

      1. 1.5.1 Bargaining Power of Buyers/Consumers

      2. 1.5.2 Bargaining Power of Suppliers

      3. 1.5.3 Threat of New Entrants

      4. 1.5.4 Threat of Substitute Products

      5. 1.5.5 Intensity of Competitive Rivalry

    6. 1.6 Government Regulations and Initiatives

    7. 1.7 Technological Trends

    8. 1.8 Insights into Rental Yields in the Office Real Estate Segment

    9. 1.9 Insights into the Key Office Real Estate Industry Metrics (Supply, Rentals, Prices, Occupancy (%)/Vacancy (%))

    10. 1.10 Insights into Office Real Estate Construction Costs

    11. 1.11 Insights into Office Real Estate Investment

    12. 1.12 Impact of COVID-19 on the Market

  2. 2. MARKET SEGMENTATION

    1. 2.1 By Key Cities

      1. 2.1.1 Tokyo

      2. 2.1.2 Kyoto

      3. 2.1.3 Rest of Japan

Japan Office Real Estate Market Size FAQs

The Japan Office Real Estate Market is projected to register a CAGR of greater than 4% during the forecast period (2024-2029)

Mitsui Fudosan, Mitsubishi Estate, Sumitomo Realty & Development, Tokyu Land Corporation and Nomura Real Estate Holdings are the major companies operating in the Japan Office Real Estate Market.

Japan Office Real Estate Report Snapshots

Japan Office Real Estate Market Size & Share Analysis - Growth Trends & Forecasts (2024 - 2029)