MarketView | JAPAN RETAIL | Q4 2023
MARKETVIEW | JAPAN RETAIL | Q4 2023
Vacancies filled amid robust demand; high street rents rise in six areas －0.7pts Q-o-Q Ginza Vacancy Rate
＋0.9% Q-o-Q Ginza High Street Rent
＋0.2pts Q-o-Q Shinsaibashi Vacancy Rate
＋10.8% Q-o-Q Shinsaibashi High Street Rent
±0.0pts Q-o-Q Sakae Vacancy Rate
±0.0% Q-o-Q Sakae High Street Rent
Figure 1: Vacancy rate (upper graph) & High street rents (lower graph) in Q4 2023
– Driven by positive sales figures, appetite for new store space remain particularly strong from luxury goods brands. However, almost all available units in Tokyo and Osaka were leased this quarter. As luxury goods brands tend to prefer large retail spaces spread across multiple floors in highly visible locations, they are now turning their attention to properties currently under construction.
6% 4%
京都
神戸
栄
天神
Tenjin
心斎橋
Sakae
渋谷
Kobe
新宿
Shinsaibashi
JPY/tsubo
表参道・原宿
Shibuya
銀座
Shinjuku
0%
Kyoto
2% Omotesando Harajuku
– Robust leasing demand was observed from retailers in the luxury brand, apparel, recycled goods, and capsule toy shop categories. Leasing activity is now being driven not only by luxury goods brands, but by a wide range of retailers benefiting from the post-pandemic economic recovery and a resurgence of inbound tourist demand.
8%
Ginza
– In Q4 2023, the vacancy rate declined q-o-q in five of the nine surveyed areas. High street rents rose in six of the 10 surveyed areas, although the only areas in which rents exceeded prepandemic levels were Ginza, Shinsaibashi and Kobe, which had already eclipsed this benchmark in previous quarters.
300,000 250,000 200,000 150,000 100,000 50,000
Q4 2019
Q4 2023
Source: CBRE, Q4 2023.
1
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MarketView | JAPAN RETAIL | Q4 2023
Figure 2: Vacancy rate & high street rent in Ginza (JPY/tsubo)
9%
280,000
Ginza and Shibuya rents rise for second straight quarter
260,000
This quarter saw several new leases signed on Ginza high street by companies in the apparel, merchandising, luxury brand, and fragrance brand sectors. Interest was also seen from high-end wristwatch brands and liquor companies. The vacancy rate fell by 0.7 pp. q-o-q to 2.8%, as several vacant units with space exceeding 100 tsubo have been taken up by retailers.
6%
Vacancies have all but dried up in the high street, leaving retailers with significantly fewer options. In addition to several lease renewals, the quarter saw a major overseas apparel brand fend off several rival retailers to secure additional space to expand its Japan flagship store. Rents for these transactions were all observed to be above what was previously paid. Retailer interest gradually spread into secondary areas this quarter, while a long-term vacancy in Ginza 1-chome also secured a tenant.
0%
200,000 Q4 2022
Q1 2023
Vacancy Rate
Q2 2023
Q3 2023
180,000
Q4 2023
High Street Rent
Source: CBRE, Q4 2023.
Figure 3: Ginza high street rent (JPY/tsubo) ▶ Forecast
270,000 260,000 250,000
Q4 2024
Q2 2024
Q1 2024
Q4 2023
Q3 2023
Q2 2023
Q1 2023
Q4 2022
Q3 2022
Q2 2022
Q1 2022
Q4 2021
Q3 2021
Q2 2021
Q1 2021
Q4 2020
Q3 2020
230,000
Q2 2020
240,000 Q1 2020
New leases were signed in Omotesando and Harajuku area this quarter by retailers in the apparel, shoe brand and re-use categories. The vacancy rate fell by 2.8 pp. q-o-q to 2.9% and was due to a take up of a large unit of over 200 tsubo in the Harajuku area. Few new vacancies occurred on the high street as a whole. Vacant spaces in Omotesando area are now limited and concentrated in secondary areas. Available units of the type sought after by luxury brands, in particular, are now almost non-existent, forcing such retailers to turn their attention to future supply. High street rents remained unchanged from the previous quarter, ending the year at JPY 198,800 per tsubo.
220,000
3%
Q4 2019
High street rents rose for the second straight quarter, increasing 0.9% q-o-q to JPY 263,000 per tsubo. This increase brought rents to 1.9% above pre-pandemic levels reported in Q4 2019 (JPY 258,000). A key factor in this latest increase was that rents on Matsuya-dori rose for the first time since the advent of the pandemic. CBRE projects high street rents to increase by a further 1.5% over the next 12 months, bringing them to 3.5% above Q4 2019 levels.
240,000
Q3 2024
Tokyo
Source: CBRE, Q4 2023.
Figure 4: Vacancy rate & high street rent in Omotesando/Harajuku (JPY/tsubo)
9%
200,000 195,000
6%
190,000 3% 0%
185,000 Q4 2022
Vacancy Rate
Q1 2023
Q2 2023
High Street Rent
Q3 2023
Q4 2023
180,000
Source: CBRE, Q4 2023.
2
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MarketView | JAPAN RETAIL | Q4 2023
During the quarter, a long-term vacant unit on Shinjuku high street finally found a tenant in the form of re-use retailer. Domestic and foreign apparels, wristwatch brands, capsule toy shops, and other re-use retailers also expressed interest in the area in Q4 2023. The vacancy rate fell by 0.9 pp. q-o-q to 5.8%. Although the vacancy rate declined for the first time since the survey began in Q3 2020, it remains the highest among Tokyo's high street retail areas, with a large space still available. Nevertheless, as a result of the steady increase in retailer appetite since spring 2023, most vacancies, particularly smaller spaces, have now been filled, with few units still available. With fewer options available for relocation within the area, an increasing number of retailers are renewing leases for their existing premises. High street rents remained unchanged from the previous quarter at JPY 170,000 per tsubo. This quarter, a select shop, and a re-use retailer signed new leases for units along Shibuya high street. Capsule toy shops, apparel brands, and mobile phone retailers also expressed interest in the area. The vacancy rate fell by 0.3 pp. q-o-q to 3.8%. This was due to the fact that tenants were secured for small vacant parcels. Available high street units are now extremely limited, with almost no properties being marketed for lease in the locations favoured by luxury brands. High street rents rose for the second straight quarter, rising by 3.9% q-o-q to JPY 134,400 per tsubo, largely on the back of surging market rates on Koen-dori, which is witnessing fierce competition between retailers from all sectors.
Figure 5: Vacancy rate & high street rent in Shinjuku (JPY/tsubo)
9%
200,000 150,000
6%
100,000 3% 0%
50,000 Q4 2022
Q1 2023
Vacancy Rate
Q2 2023
High Street Rent
Q3 2023
0
Q4 2023
Source: CBRE, Q4 2023.
Figure 6: Vacancy rate & high street rent in Shibuya (JPY/tsubo)
9%
135,000
6%
130,000
3%
125,000
0%
Q4 2022
Q1 2023
Vacancy Rate
Q2 2023
Q3 2023
Q4 2023
120,000
High Street Rent
Source: CBRE, Q4 2023.
Figure 7: Number of new store openings by sector*
100% 80% 60% 40% 20% 0%
Q4 2022
Q1 2023
Q2 2023
Q3 2023
Q4 2023
Other Reuse Showroom Furniture&Goods Drug Store Health&Beauty Outdoors&Sports F&B Luxury Fashion
*The data covers five areas, including Ginza, Omotesando, Harajuku, Shinjuku, and Shibuya Source: CBRE Research, company press releases and media reports CBRE, Q4 2023.
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Kansai
Figure 8: Vacancy rate & high street rent in Shinsaibashi (JPY/tsubo)
9%
240,000
6%
200,000
3%
160,000
Rents continue to rise; Shinsaibashi rents now 14.1% above pre-pandemic levels During Q4 2023, luxury brands were seen to be aggressively looking to secure space on Mido-suji on Shinsaibashi high street. Retailers in this category are focusing not only on existing properties but also turning their attention to those still under development. In terms of leases signed during the quarter, some saw rents pushed up well above previous levels due to strong competition between retailers for limited available units. Elsewhere, a major apparel retailer, which had closed its doors following the onset of the pandemic, finally re-opened on the same site in the Shinsaibashisuji Shopping Street. Apparel, sporting goods, and outdoor goods brands also expressed interest in vacant units this quarter. The vacancy rate increased 0.2 pp. q-o-q to 3.0%. Although progress was made in securing tenants for available space, several new properties completed this quarter had units still available. High street rents rose for a fourth consecutive quarter, surging by 10.8% q-o-q to JPY 226,000 per tsubo. This represented a 14.1% increase over the pre-pandemic level of JPY 198,000 in Q4 2019, outstripping all other areas nationwide in terms of growth over this period.
0%
Q4 2022 Vacancy Rate
Q1 2023
Q2 2023
Q3 2023
120,000
Q4 2023
High Street Rent
Source: CBRE, Q4 2023.
Figure 9: Vacancy rate & high street rent in Kyoto (JPY/tsubo)
9%
100,000
Available properties in Umeda drew interest from retailers in several categories, including drugstores, eyewear stores, and an official character merchandise store. High street rents remained unchanged from the previous quarter at JPY 114,000 per tsubo, with no new contracts signed that would indicate a change in the market rate.
6%
80,000
3%
60,000
Led by apparel retailers, new leases were also signed in Kyoto high street this quarter by companies that include luxury goods and sneaker brands. The strong recovery in retailer appetite since 2023 means that available units on Shijo-dori are now becoming scarce, forcing retailers to begin looking further afield. Other activity this quarter included an outdoor brand opening a new store on Karasuma-dori. The vacancy rate fell by 2.0 pp. q-o-q to 3.3%. High street rents rose by 3.8% q-o-q to reach JPY 96,500, marking a sixth consecutive quarterly increase.
0%
Kobe high streets drew interest from luxury brands and jewelry retailers this quarter, as well as fitness gyms and hair salons targeting local residents. In response to burgeoning retailer demand, some long-term vacancies began to attract enquiries during Q4 2023. Although the vacancy rate increased by 0.2 pp. q-o-q to 4.2% due to a rise in small-sized vacancies, high street rents rose for the second straight quarter, up by a healthy 5.0% q-o-q to JPY 104,500 per tsubo.
Q4 2022 Vacancy Rate
Q1 2023
Q2 2023
Q3 2023
Q4 2023
40,000
High Street Rent
Source: CBRE, Q4 2023.
Figure 10: Vacancy rate & high street rent in Kobe (JPY/tsubo)
9%
120,000
6%
100,000
3%
80,000
0%
Q4 2022 Vacancy Rate
Q1 2023
Q2 2023
Q3 2023
Q4 2023
60,000
High Street Rent
Source: CBRE, Q4 2023.
4
CBRE RESEARCH
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MarketView | JAPAN RETAIL | Q4 2023
Nagoya: Sakae
Fukuoka: Tenjin
High street rents remain unchanged for fourth straight quarter
Rents resume upward swing, rising by 1.3%
High-end wristwatch and apparel retailers confirmed new stores in the Sakae area this quarter, while recycled goods, cosmetics, and mountaineering goods retailers also expressed an interest in empty units. Vacancies in the area remain few and far between, however, particularly on the highly sought after Minami Otsu-dori. New supply is scheduled to be completed on this street in 2026, with a luxury brand already reported to be looking to secure a street level unit of this property. As this new facility is likely to increase foot traffic in the area, it may draw out latent retail demand from other luxury brands and retailers looking to improve their profile. The vacancy rate was flat q-o-q at 0.0%, while high street rents remained unchanged from the previous quarter at JPY 71,000 per tsubo.
Drugstore, apparel, and karaoke operators all confirmed new stores in Tenjin high street this quarter. At the same time, enquiries were registered from wristwatch and jewelry brands, fragrance brands, and amusement arcades. The vacancy rate was up 0.5 pp. q-o-q to 3.0%. While several vacant units secured tenants this quarter, space left empty due to the closure of a large drugstore pushed up the vacancy rate. High street rents rose by 1.3% q-o-q to JPY 56,200 per tsubo as rents in several areas finally moved above pandemic-induced lows. While apparel retailers are now able to afford higher rents than before, with rents for new contracts signed by retailers in this category showing a slight increase over previous levels, a majority of retailers looking for new space are still cost-conscious. One long-term vacancy finally managed to secure a tenant this quarter, but only after its owner accepted an offer below the initial asking rent.
Figure 11: Vacancy rate & high street rent in Sakae (JPY/tsubo)
Figure 12: Vacancy rate & high street rent in Tenjin (JPY/tsubo)
6%
75,000
6%
60,000
4%
70,000
4%
55,000
2%
65,000
2%
50,000
60,000
0%
0% Q4 2022
Q1 2023
High Street Rent Vacancy Rate
Source: CBRE, Q4 2023.
5
CBRE RESEARCH
Q2 2023
Vacancy Rate High Street Rent
Q3 2023
Q4 2023
45,000 Q4 2022 Vacancy HighRate Street Rent
Q1 2023
Q2 2023
Q3 2023
Q4 2023
High Street Rent Vacancy Rate
Source: CBRE, Q4 2023.
© 2024 CBRE, INC.
MarketView | JAPAN RETAIL | Q4 2023
Figure 13: Vacancy Rate
Figure 14: High Street Rent (JPY / Tsubo / Month)
Q4 2022 Q1 2023 Q2 2023 Q3 2023 Q4 2023
Q1 2023
Q2 2023
Q3 2023
Q4 2023
Ginza
250,700
257,600
257,600
260,600
263,000
Omotesando/Harajuku
188,800
188,800
188,800
198,800
198,800
Shinjuku
170,000
170,000
170,000
170,000
170,000
Shibuya
127,800
127,800
127,800
129,400
134,400
Shinsaibashi
152,000
164,000
193,000
204,000
226,000
Umeda
96,500
101,500
101,500
114,000
114,000
Kyoto
71,000
80,000
85,000
93,000
96,500
Kobe
80,000
80,500
80,500
99,500
104,500
Ginza
7.6%
6.2%
6.7%
3.5%
2.8%
Omotesando/Harajuku
5.6%
6.7%
7.2%
5.7%
2.9%
Shinjuku
6.6%
6.6%
6.7%
6.7%
5.8%
Shibuya
6.9%
5.9%
2.9%
4.1%
3.8%
Shinsaibashi
7.6%
4.6%
3.4%
2.8%
3.0%
Kyoto
6.6%
7.8%
8.0%
5.3%
3.3%
Kobe
6. 0 %
5.2%
5.2%
4.0%
4.2%
Nagoya
Sakae
0.0%
0.0%
0.0%
0.0%
0.0%
Nagoya
Sakae
71,000
71,000
71,000
71,000
71,000
Fukuoka
Tenjin
2.5%
3.0%
2.5%
2.5%
3.0%
Fukuoka
Tenjin
46,500
47,500
55,500
55,500
56,200
Q4 2022
Q1 2023
Q2 2023
Q3 2023
Q4 2023
Ginza
400,000
400,000
400,000
400,000
400,000
Omotesando/Harajuku
350,000
350,000
350,000
350,000
350,000
Shinjuku
300,000
300,000
300,000
300,000
300,000
Shibuya
300,000
300,000
300,000
300,000
300,000
Shinsaibashi
300,000
300,000
350,000
350,000
380,000
Umeda
130,000
130,000
130,000
180,000
180,000
Kyoto
100,000
110,000
120,000
135,000
140,000
Kobe
150,000
150,000
150,000
200,000
220,000
Nagoya
Sakae
100,000
100,000
100,000
100,000
100,000
Fukuoka
Tenjin
100,000
100,000
100,000
100,000
100,000
Tokyo
Kansai
Tokyo
Kansai
Vacancy rate surveys cover all units for lease, including those on the ground floor. Source: CBRE, Q4 2023.
Source: CBRE, Q4 2023.
Figure 15: Area Traffic Volume
Figure 16: Prime Rent (JPY / Tsubo / Month)
Ginza
Tokyo
Omotesando/Harajuku Shinjuku Shibuya Shinsaibashi
Kansai
Kyoto Kobe
Nagoya
Sakae
Fukuoka
Tenjin
Q-o-Q
vs. Q4 2019
＋6%
－43%
＋6%
－35%
＋2%
－34%
＋11%
－35%
－4% ＋1%
＋4% ＋2%
＋6%
CBRE RESEARCH
Tokyo
－35%
－36%
Kansai
－40% －35%
－47%
Source: Giken Shoji International “KDDI Location Analyzer*” CBRE, Q4 2023. * Aggregation of “au” smartphone users with individual consent, processed so that individuals cannot be identified. * The numbers may have changed for the past data due to accuracy improvements of KDDI Location Analyzer data. 6
Q4 2022
Source: CBRE, Q4 2023.
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MarketView | JAPAN RETAIL | Q4 2023
Terms and Definitions
Tokyo
Kanazawa
Meiji Yasuda Seimei Building 2-1-1 Marunouchi, Chiyoda-ku, Tokyo
JR Kanazawa Station West 4th NK Building, 3-3-11 Hirooka, Kanazawa-shi Ishikawa
Osaka
Nagoya
Grand Front Osaka 4-20, Ofuka-cho, Kita-ku, Osaka-shi, Osaka
Miyuki Building 3-20-27 Nishiki, Naka-ku, Nagoya-shi, Aichi
Q1) End of March Q2) End of June Q3) End of September Q4) End of December
Sapporo
Hiroshima
Vacancy Rate
• Physically available for tenants at the time of survey
Nihon Seimei Sapporo Building 4-1-1 Kitasanjonishi, Chuo-ku, Sapporo-shi, Hokkaido
Shishinyo Building 3-17 Fukuromachi, Naka-ku, Hiroshima-shi, Hiroshima
Prime rent
• Based on sample survey of the subject area, including CAM, and excluding any incentive such as free rent • Rents for prime areas within the main retail districts in major cities
Vacancy Rate
• Vacancy rate cover all units for lease, including those on the ground floor in the high street areas assigned by CBRE • Tokyo - Ginza :143 properties, Omotesando/Harajuku: 228 properties, Shinjuku: 60 properties, Shibuya: 65 properties • Kansai - Shinsaibashi: 185 properties, Kyoto: 179 properties, Kobe: 106 properties • Nagoya - Sakae: 52 properties • Fukuoka - Tenjin: 193 properties
Prime rent/ High Street Rent
• Ground floor retail space for lease located in retail markets in the high street areas assigned by CBRE with floor area of approx. 200 square meters.
Subject Area
Area Traffic Volume Term
Quarterly
Survey method High Street Rent Area Traffic Volume
• The retail market areas assigned by CBRE
• Average of the upper rents and lower rents based on sample survey of the subject area, including CAM, and excluding any incentive such as free rent
Sendai
• y-o-y % changes of traffic volume in the subject area
Sendai Mark One 1-2-3 Chuo, Aoba-ku, Sendai-shi, Miyagi
Fukuoka Fukuoka Center Building 2-2-1 Hakata-Ekimae, Hakata-ku, Fukuoka-shi, Fukuoka
Yokohama
Contacts
Hiroshi Okubo
Asuka Honda
Head of Research
Director
hiroshi.okubo@cbre.com
asuka.honda@cbre.com
Yokohama ST Building 1-11-15 Kitasaiwai, Nishi-ku, Yokohama-shi, Kanagawa
© Copyright 2024. All rights reserved. This report has been prepared in good faith, based on CBRE’s current anecdotal and evidence based views of the commercial real estate market. Although CBRE believes its views reflect market conditions on the date of this presentation, they are subject to significant uncertainties and contingencies, many of which are beyond CBRE’s control. In addition, many of CBRE’s views are opinion and/or projections based on CBRE’s subjective analyses of current market circumstances. Other firms may have different opinions, projections and analyses, and actual market conditions in the future may cause CBRE’s current views to later be incorrect. CBRE has no obligation to update its views herein if its opinions, projections, analyses or market circumstances later change.
7
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