Ginza High Street rents rise for the first time since pandemic Driven by luxury demand, rents increase by 3.8% q-o-q
0.1pts
Ginza High Street Vacancy Rate **** Q4
Starting previous quarter (Q3 2022), vacancy rate surveys will no longer be restricted to ground floor properties for which tenant demand is highest, but will instead cover all units for lease, including those on the ground floor.
━ Tokyo: The high street vacancy rate for Q4 2022 fell by 0.1 points q-o-q to 7.6% as an available property that had been attracting interest since the previous quarter secured a tenant. Ginza high street rents rose by 3.8% q-o-q to JPY 250,700 per tsubo per month. This rise was primarily a result of multiple luxury brands expressing a willingness to pay above-market rates for the opportunity to open stores in prime high street locations.
━ Osaka: The high street vacancy rate for Q4 2022 declined 6.4 points q-o-q to 7.6%, mainly due to several retailers confirming leases for pop-up stores in a number of units sized over 100 tsubo. Shinsaibashi high street rents remained unchanged from the previous quarter at JPY 152,000 per tsubo per month. During the quarter, demand was seen from multiple luxury brands seeking store space on the Mido-suji high street. With available properties extremely limited in number, some tenants have already been confirmed for a new facility under development and not due for completion for a few more years.
━ Nagoya: The high street vacancy rate for Q4 2022 declined 0.4 points q-o-q to 0.0%, as a tenant was confirmed for unit which was vacant after the departure of a pop-up store. High street rents in the Sakae district of Nagoya rose 1.4% q-o-q to JPY 71,000 per tsubo per month, as a result of strong demand from high-end wristwatch brand and other retailers and very little in the way of available units.
Source: CBRE, Q4 2022
Ginza High Street Rent **** Q4
Source: *Ministry of Economy, Trade and Industry
**Japan Department Stores Association ***Japanese Cabinet Office ****CBRE
Economy
Department store sales increase 6.0% y-o-y
National department store sales in the October-December quarter increased by 6 0% y-o-y Although some customers refrained from going out due to the spread of COVID-19, the year-end sales season witnessed brisk activity thanks to the lifting of restrictions on social activity Sales of luxury brands and jewelry continued to be strong, as in the previous quarter, while sales of coldweather gears increased due to lower temperatures In particular, sales to inbound tourists in December were up 484 7% from the previous month
The consumer confidence index rose by 1.4 points m-o-m in December 2022 to 30.3 points, the first improvement in four months. The primary reason for this recovery in consumer confidence was the normalization of economic activity The reversal of weakening Yen and rise in material costs, which had been the major contributing factors to inflation, also had a positive effect.
Tokyo: Ginza
Demand from luxury brands drives up high street rents
The high street vacancy rate for Q4 2022 fell by 0 1 points q-o-q to 7 6% as an available property that had been attracting interest since the previous quarter secured a tenant However, a number of relatively large units not well suited to luxury brand stores remained vacant
Ginza high street rents rose by 3.8% q-o-q to JPY 250,700 per tsubo per month. This rise was primarily due to multiple luxury brands willing to pay above-market rates for the opportunity to open stores in prime high street locations. Rents are expected to continue their gradual upward trend. Over the next two years, we expect rents to rise 2.7% relative to the current quarter and recover to just 0.2% below the level recorded in Q4 2019 just before the advent of the pandemic.
During the quarter, an available property in the high street area of Chuo-dori secured a luxury goods brand as its new tenant, while another on Harumi-dori attracted interest from many prospective tenants, including from brands without a street presence in the Ginza area Factors driving interest in the property include its presence in a prime location even within a Ginza high street area, and its small floor area of less than 50 tsubo, a size that is rarely available CBRE believes it is possible that the next tenant for the property will end up paying more than its current tenant Another available property on the same street had previously struggled to generate interest due to its relatively large floor area but attracted enquiry from a luxury brand this quarter An available property on Miyuki-dori, meanwhile, secured a luxury goods brand as its new tenant at a level around its asking rent Elsewhere, a new development not due for completion for several years has already attracted interest from multiple retailers
In Q4 2022, a property that has stood vacant for some time in the secondary area of Chuo-dori finally began to attract more interest after its owner subdivided the available units. With the smaller floor area allowing prospective retailers to pay higher per-tsubo rents, it is now possible that tenants will be secured at the owner’s original asking rate.
Tokyo: Omotesando/Harajuku
Demand from luxury brands concentrated on Omotesando high street
The high street vacancy rate for Q4 2022 rose by 0 7 points q-o-q to 5 6% During the quarter, vacancies arose on multiple floors on the Harajuku side of High Street
High street rents for Omotesando and Harajuku rose by 2.7% q-o-q to JPY 188,800 per tsubo per month. As was the case last quarter, properties in the prime high street area of Omotesando saw high demand from several luxury goods brands. With very little space in the area available, each vacant unit that arose during the quarter sparked competition from a number of retailers, pushing up achievable rents. Among properties on the street is a new development not due for completion for several years but which has nevertheless already attracted enquiries from multiple retailers. Tenders have also been received from several retailers for an available property on Meiji-dori at the landlords’ asking rent. However, other available units on Meiji-dori and Aoyama-dori, which has relatively large floor space and therefore requires high total rent payment, continued to struggle to find new tenants. Demand was nevertheless seen from several pop-up store operators.
This quarter, an available property in a secondary area drew interest from a retailer looking to appeal to Gen Z consumers by rebranding Elsewhere, a separate property was seen to be under consideration by an overseas retailer as a location for its second store in Japan, following the success of its first store in the Ginza area
Tokyo: Shinjuku
Rents remain stable despite solid demand from a broad range of industries
The high street vacancy rate for Q4 2022 remained unchanged from the previous quarter at 6.6% While no new tenancies were confirmed this quarter, neither were there any new vacancies
Shinjuku high street rents remained unchanged for the fourth straight quarter at JPY 170,000 tsubo per month Demand was seen for store space on the Shinjuku-dori high street from a wide variety of sectors, including watch retailers, outdoor and sporting brands, and health and beauty retailers However, proposed rent levels general fell within the current market range. While the period also witnessed demand from a foreign retailer looking for a site for its first Japanese store, the group did not appear to have the budget required to push up high street rents Also this quarter, a relatively large property on Shinjukudori attracted interest, but only on the condition that its space be subdivided. Elsewhere, a retailer already occupying a comparatively large unit was seen to be considering relocating to a smaller premise to lower costs.
During the quarter, an available property in a secondary area attracted bids from multiple retailers. While the rents proposed by the interested retailers were below what the current tenant is paying, they were equivalent to prevailing market rates. However, another property whose asking rent exceeded the market rate continued to struggle to find a tenant
Tokyo: Shibuya
Significant demand from retailers targeting Gen Z consumers
The high street vacancy rate for Q4 2022 rose by 3 4 points q-o-q to 6 9%, mainly due to an increase in vacancies among large units exceeding 200 tsubo
Shibuya high street rents remained unchanged from the previous quarter at JPY 127,800 per tsubo per month. Demand for store space on Shibuya area high streets was seen from a range of brands in sectors looking to strengthen their presence to target Gen Z consumers, including luxury, fashion, and outdoor and sporting goods. With few properties available that are likely to satisfy these retailers’ criteria, however, some have already turned their attention to a new property not due for completion for several years. At the same time, some tenants were understood to be considering withdrawing from the Shibuya area upon termination of their leases, as a result of flagging sales.
In Q4 2022 one available property in the secondary area of Center-gai confirmed an amusement arcade as its new tenant, after the owner made several concessions, including lowering the asking rent and shouldering initial costs for air conditioning installation Also this quarter, a number of retailers with an existing presence in the area were considering relocating, either to superior locations or from basement to street-level stores However, these retailers have taken a cautious approach, opting to find properties that precisely fit their needs in terms of rent level and location
*The data covers five areas, including Ginza, Omotesando Harajuku, Shinjuku, and Shibuya
Source:
Research, company press releases and media reports CBRE, Q4 2022.
Kansai: Shinsaibashi
Signs of recovery seen in retailer demand for space in the Shinsaibashi-suji shopping district
The high street vacancy rate for Q4 2022 declined 6.4 points q-o-q to 7.6%, mainly due to the confirmation of a number of leases for pop-up stores in several units of over 100 tsubo.
Shinsaibashi high street rents remained unchanged from the previous quarter at JPY 152 000 per tsubo per month Demand was seen from multiple luxury brands for store space on the Mido-suji high street With available properties extremely limited in number, some tenants have already been confirmed for a new facility under development and not due for completion for several years
During the quarter, an available property in the Shinsaibashi-suji shopping district secured a recycled goods retailer as its new tenant. The property’s excellent location, combined with an asking rent below pre-pandemic levels, persuaded the retailer to commit to a lease for the unit. The recovery in inbound tourist spending led to increased sales for certain retailers this quarter, some of whom are looking to take advantage of further anticipated surges in inbound consumption by opening new stores Retailer interest was also seen to be on the rise for smaller units of less than 100 tsubo. By way of contrast, the owner of one larger unit is understood to be considering offering a lease to a pop-up store operator if it is unable to find a permanent tenant Among the owners of vacant properties left by their previous tenants are some who have expressed a willingness to demolish the current buildings and rebuild to suit their next tenants’ needs
Demand from the pet store and recycled goods industries, both of which have enjoyed increased sales during the pandemic, was observed for space in secondary areas in Q4 2022 with such retailers willing to pay current market rates One new property became available in America-mura as the result of an overseas brand withdrawing from the Japanese market Located in a slightly weaker area, the vacant unit has yet to secure a tenant
Kansai: Umeda
High street rents rise as foot traffic returns to some locations
In Q4 2022, Umeda high street rents rose by 2 1% q-o-q to JPY 96,500 per tsubo per month on the back of the return of foot traffic in areas whose rents had fallen sharply during the pandemic While some demand continued to be observed for showrooms, sporting brands stores and recycled goods stores, no new stores opened this quarter amid limited street-level vacancies
In Q4 2022, an available property in the secondary area of Chayamachi was secured by a recycled goods retailer, buoyed by its thriving sales figures during the pandemic. While keeping its existing store in the area, located on a higher floor, this second store represents the retailer’s first street-level presence in Umeda. However, another available property on the same street was struggling to attract attention for its streetlevel unit due to a lack of foot traffic in the area. In contrast, its upper-level units, meanwhile, have drawn interest from cosmetic industry operators of beauty clinics and shared salons. A similar situation was seen at another property in a secondary area south of JR Osaka Station, where the upper-level and basement units attracted demand from cosmetics industry retailers, but the slightly above market-level rents asked for the street-level units deterred prospective tenants.
Several large-scale construction projects are slated for completion in 2024, with tenants already confirmed for some of the retail units within those facilities
Kansai: Kyoto
Demand from luxury brands drives rent increases
The high street vacancy rate for Q4 2022 dropped by 0 2 points q-o-q to 6 6% in Q4 2022, as several small units confirmed new tenants
Kyoto high street rents for the quarter surged by 3.6% to JPY 71,000 per tsubo per month as a result of continued demand from multiple luxury brands for store space in the central city. Also this quarter, one available property on the Shijo-dori high street confirmed a fashion brand as its new tenant. While the contracted rent was slightly below the asking rate, percentage rents will be paid in order to increase the landlords’ profits. While the trend for percentage rents emerged along with the onset of the pandemic, only a small number of lease contracts for street-level stores include such provisions.
Other activity in Q4 2022 included a fashion brand secured as a new tenant for an available property in a secondary area on Higashinotoin-dori at market rates
Also this quarter, Takashimaya announced the creation of a new specialist store zone to open in autumn 2023 in a plot adjacent to its Kyoto department store This will lead to the birth of a new commercial facility combining both retail zones, to be known as the Kyoto Takashimaya Shopping Centre, which should further reinvigorate the Shijo-dori area
Kansai: Kobe
Rents remain flat despite number of enquiries
The high street vacancy rate for Q4 2022 fell by 1 5 points q-o-q to 6 0%, largely due to the confirmation of several leases in Sannomiya Center-gai
Kobe high street rents remained unchanged from the previous quarter at JPY 80 000 per tsubo per month. While several retailers opened or displayed interest in opening new stores in high street areas, rents they are willing to pay remained essentially unchanged from the previous quarter. Elsewhere, a new store was launched by an eyewear brand in the Sannomiya Center-gai high street, marking its first street-level presence in the Kansai region. Multiple units in the same shopping district were also secured by fashion brands and recycled goods stores. Also this quarter, one relatively small property which offers tenants’ the advantage of a low total rental burden confirmed a tenant without significant delay. On the Sannomiya Chuo-dori high street, too, a sports brand opened its first concept store in the Kansai region
Other activity was observed in a secondary area on Sannomiya Chuo-dori, where a dining chain opened its first outlet in the Kansai region; and on Koikawa-suji, where a new drugstore opened However, a property in a low-traffic area some distance from Sannomiya Station saw little interest from retailers and is taking considerable time to find a new tenant
Nagoya: Sakae
Limited availability struggles to keep up with demand
The high street vacancy rate for Q4 2022 declined 0 4 points q-o-q to 0 0% as a tenant was confirmed for a unit recently vacated by a pop-up store
High street rents in the Sakae district of Nagoya rose by 1.4% from the previous quarter to JPY 71 000 per tsubo per month as a result of strong demand from high-end wristwatch brands and a lack of availability. During the quarter, an available property on the Otsu-dori high street secured as its new tenant a luxury goods brand looking to open its first street-level store in the Sakae area, while a pop-up store opened on another available site on the same street. Another available property in an excellent location which had nevertheless struggled to find a new tenant due to its sub-optimal floorplate began to attract retailer attention this quarter, with negotiations progressing well and not far from the landlords’ asking rents. However, among the drugstores which set up shop in the area prior to the pandemic are some which are now considering closing as a result of poor sales, with their operators having determined that it will take longer than expected for inbound tourist spending to recover.
While one available property in a secondary area attracted tenders, no agreement was reached this quarter However, as its floor space is relatively small at around 50 tsubo, a new tenant is likely to be confirmed soon
Fukuoka: Tenjin
High street rents remain unchanged for fifth straight quarter despite number of enquiries
The high street vacancy rate for Q4 2022 fell by 2.0 points from the previous quarter to 2.5%, as a result of the new opening for a large property of over 300 tsubo and the confirmation of several tenants.
Tenjin high street rents remained unchanged for the fifth straight quarter at JPY 46,500 per tsubo per month as number of interest from retailers failed to raise the rent levels Demand was observed from retailers without a current street-level presence in the area, as well as those looking to relocate due to rebuilding of their existing premises During the quarter, one long-term vacancy on the Tenjin Nishi-dori high street received enquiries from multiple retailers from the health and beauty and outdoor goods sectors, while another available property on the same street drew interest from a drugstore operator. While many drugstores were forced to close their doors during the worst of the pandemic, fresh demand is starting to be seen from the sector once more, with operators anticipating a recovery in inbound tourist spending.
With several properties in secondary areas having stood vacant for some time, the owner of one such property on Kokutai-doro has decided to lease the unit as a pop-up store for advertising purposes until a long-term tenant can be found.
Starting previous quarter (Q3 2022), vacancy rate surveys will no longer be restricted to ground floor properties for which tenant demand is highest, but will instead cover all units for lease, including those on the ground floor.
CBRE, Q4 2022.
Figure 18: Area Traffic Volume (Q4 2022)
* Aggregation of “au” smartphone users with individual consent, processed so that individuals cannot be identified.
Source: Giken Shoji International “KDDI Location Analyzer*” CBRE, Q4 2022.
* The numbers may have changed for the past data due to accuracy improvements of KDDI Location Analyzer data
Terms and Definitions
• Vacancy rate cover all units for lease, including those on the ground floor in the high street areas assigned by CBRE
Tokyo
Kanazawa
Vacancy Rate
Subject Area
Prime rent/ High Street Rent
Area Traffic Volume
• Tokyo - Ginza 153 properties, Omotesando/Harajuku: 240 properties, Shinjku 59 properties, Shibuya: 67 properties
• Kansai - Shinsaibashi 179 properties, Kyoto: 175 properties, Kobe: 107 properties
• Nagoya - Sakae: 53 properties
• Fukuoka - Tenjin: 203 properties
• 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.
• The retail market areas assigned by CBRE
Term Quarterly Q1) End of March Q2) End of June Q3) End of September Q4) End of December
Vacancy Rate
Prime rent
Survey method
High Street Rent
Area Traffic Volume
Contacts
Hiroshi Okubo
Head of Research
hiroshi.okubo@cbre.com
• Physically available for tenants at the time of survey
• 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
• 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
• y-o-y and q-o-q % changes of traffic volume in the subject area
Kaoru Kurisu Director
kaoru.kurisu@cbre.com
Kumiko Ninomiya Analyst kumiko.ninomiya@cbre.com
Meiji Yasuda Seimei Building 2-1-1 Marunouchi, Chiyoda-ku
Tokyo
Osaka
Grand Front Osaka 4-20, Ofuka-cho, Kita-ku Osaka-shi, Osaka
Sapporo
Nihon Seimei Sapporo Building
4-1-1 Kitasanjonishi, Chuo-ku, Sapporo-shi Hokkaido
Sendai
Sendai Mark One 1-2-3 Chuo, Aoba-ku Sendai-shi, Miyagi
Yokohama
Yokohama ST Building 1-11-15
Kitasaiwai, Nishi-ku, Yokohama-shi, Kanagawa
Aube II Building 5-177 Kuratsuki, Kanazawa-shi, Ishikawa
Nagoya
Miyuki Building 3-20-27 Nishiki, Naka-ku, Nagoya-shi, Aichi Hiroshima Shishinyo Building 3-17 Fukuromachi, Naka-ku, Hiroshima-shi, Hiroshima
Fukuoka
Fukuoka Center Building 2-2-1 Hakata-Ekimae, Hakata-ku Fukuoka-shi, Fukuoka
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