MarketView | JAPAN RETAIL | Q3 2023
MARKETVIEW | JAPAN RETAIL | Q3 2023
High street rents rise sharply in Kansai; Rents in Shinsaibashi and Kobe now above pre-COVID levels + 6.6% y-o-y Jul. to Sep. Retail Sales*
+ 9.5% y-o-y Jul. to Sep. Department store sales**
ｰ 1.0pts m-o-m
Consumer confidence index*** Sep. 2023
ｰ 3.2pts q-o-q
+ 1.2% q-o-q
Ginza High Street Vacancy Rate **** Q3
Starting 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.
Ginza High Street Rent **** Q3
Source: *Ministry of Economy, Trade and Industry **Japan Department Stores Association ***Japanese Cabinet Office ****CBRE
Figure 1: High street vacancy (upper graph) & prime rent/high street rents (lower graph) in Q3 2023
As the economy continues to re-open, monthly retail sales have now exceeded the level just before the COVID-19 outbreak by more than 10%. The number of overseas visitors to Japan is steadily recovering, with the amount spent by foreign visitors to Japan in Q3 2023 not only exceeding the level of the same period in 2019, just before the onset of the pandemic, but reaching a record high for a single quarter. Along with the recovery in consumer activity, demand for new store openings on the high streets of Japan’s major cities increased over the quarter, led by requirements from drugstores, Japanese apparel bands, cosmetics, food & beverage, and other sectors which had remained static during the pandemic.
15%
With availability becoming scarce in some areas, leasing activity by luxury brands, which has generally maintained steady momentum even in the midst of the pandemic, has slowed. However, as underlying demand remains strong, numerous cases were observed this quarter of rents being raised because of multiple retailers competing for a single unit. High street rents rose q-o-q in Tokyo, Kyoto, Osaka, and Kobe in Q3 2023, exceeding pre-pandemic levels in Shinsaibashi and Kobe for the first time.
500,000
12% 9% 6%
神戸
栄
天神
Tenjin
京都
Sakae
心斎橋
Kobe
渋谷
Kyoto
新宿
Shinsaibashi
JPY/tsubo
表参道・原宿
Shibuya
Ginza
銀座
Shinjuku
0%
Omotesando Harajuku
3%
400,000 300,000 200,000 100,000 0
Prime Rent
High Street Rent
Source: CBRE, Q3 2023.
1
CBRE RESEARCH
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MarketView | JAPAN RETAIL | Q3 2023
Figure 2: Ginza high street rent (JPY/tsubo)
▶ Forecast
270,000
Availability in prime properties tightens amid strong retailer demand
260,000
Ginza high street vacancy rate for Q3 2023 fell by 3.2 pp q-o-q to 3.5%, as number of vacant spaces were filled while there were limited additional vacancy. Demand from retailers for space in Ginza remained strong in Q3 2023, mainly from the cosmetics, sporting goods and apparel categories. Retail units with the locations and specifications particularly sought after by luxury brands are now becoming scarce. High street rents stood at JPY 260,600 per tsubo per month, up 1.2% q-o-q and 1.0% above Q4 2019, immediately prior to the onset of the pandemic. Given the current tight supply and demand situation, Ginza high street rents are expected to continue to rise and are forecasted to be 2.8% above the current level in one year’s time.
250,000
In Omotesando and Harajuku, the high street vacancy rate in Q3 2023 fell by 1.5 pp q-o-q to 5.7%. The availability of units in prime locations, which remain keenly sought after by luxury brands, is gradually tightening. This quarter nevertheless saw multiple retailers open stores, including watch brands, men's tailors, foreign leather goods, interior goods, domestic apparel, and cosmetics. Strong demand for new store openings was also observed from a wide range of businesses including domestic and international apparel and shoe brands, as well as fitness, sporting goods, and food retailers. High street rents for this quarter stood at JPY 198,800 per tsubo per month, up 5.3% q-o-q. Shinjuku high street vacancy rate in Q3 2023 was flat q-o-q at 6.7%. A foreign shoe brand and a watch brand opened stores this quarter, while restaurants, furniture, and domestic sports brands were also seen looking for available premises. Meanwhile, owing to the lack of confirmed rents among new store openings this quarter that would raise the overall market-level, high street rents remained unchanged q-o-q at JPY 170,000 per tsubo per month. Shibuya high street vacancy rate in Q3 2023 was up 1.2 pp q-o-q at 4.1%, with one new vacancy confirmed at one premise. Meanwhile, the area saw several openings by second-hand stores, restaurants, and mobile shops. One unit secured a tenant for the first time since it was put on the market four years ago. Demand for new store openings was seen from a wide range of sectors, including luxury, food and beverage, cosmetics, sports brands, domestic eyewear brands, and capsule toy shops. High street rents rose 1.3% q-o-q to JPY 129,400 per tsubo per month.
240,000 Q3 2024
Q2 2024
Q1 2024
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
Q2 2020
Q1 2020
Q4 2019
Q3 2019
230,000 Q4 2023
Tokyo
Source: CBRE, Q3 2023.
Figure 3: Number of new store openings by location
60 40 20 0
2022 2023 Ginza
2022 2023 Omotesando
Q1
Q4
Q2
Q3
2022 2023 Harajuku
2022 2023 Shinjuku
2022 2023 Shibuya
Source: CBRE Research, company press releases and media reports CBRE, Q3 2023.
Figure 4: Number of new store openings by sector*
60
Other Reuse Showroom Furniture&Goods Drug Store Health&Beauty Outdoors&Sports F&B Luxury Fashion
40
20
0
Q3 2022
Q4 2022
Q1 2023
Q2 2023
Q3 2023
*The data covers five areas, including Ginza, Omotesando, Harajuku, Shinjuku, and Shibuya Source: CBRE Research, company press releases and media reports CBRE, Q3 2023.
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CBRE RESEARCH
© 2023 CBRE, INC.
MarketView | JAPAN RETAIL | Q3 2023
Figure 5: High street vacancy rate & high street rent in Ginza (JPY/tsubo)
Figure 6: High street vacancy rate & high street rent in Omotesando/Harajuku (JPY/tsubo)
9%
270,000
9%
210,000
6%
250,000
6%
190,000
3%
230,000
3%
170,000
210,000
0%
0% Q3 2022 Vacancy Rate
Q4 2022
Q1 2023
Q2 2023
Q3 2023
Vacancy Rate
High Street Rent
Q4 2022
Q1 2023
Q2 2023
Q3 2023
High Street Rent
Source: CBRE, Q3 2023.
Source: CBRE, Q3 2023.
Figure 7: High street vacancy rate & high street rent in Shinjuku (JPY/tsubo)
Figure 8: High street vacancy rate & high street rent in Shibuya (JPY/tsubo)
9%
180,000
9%
130,000
6%
170,000
6%
120,000
3%
160,000
3%
110,000
150,000
0% Q3 2022 High Street Rent Vacancy Rate
Source: CBRE, Q3 2023.
3
150,000 Q3 2022
CBRE RESEARCH
Q4 2022
Q1 2023
Vacancy Rate Rent High Street
Q2 2023
Q3 2023
0%
100,000 Q3 2022 Vacancy Rate
Q4 2022
Q1 2023
Q2 2023
Q3 2023
High Street Rent
Source: CBRE, Q3 2023.
© 2023 CBRE, INC.
MarketView | JAPAN RETAIL | Q3 2023
Kansai Rents increase significantly in all areas, with those in Kobe and Shinsaibashi exceeding pre-pandemic levels Shinsaibashi high street vacancy rate in Q3 2023 fell 0.6 pp q-o-q to 2.8%. While number of vacant spaces were filled, there were no additional vacancy during the quarter. Several retailers including a foreign sports brand and a Japanese apparel brand opened new stores. The period saw newly built properties receive multiple enquiries from a range of retailers in categories such as drug stores and second-hand goods. In addition to sports brands, lifestyle brands, accessories, and capsule toy shops, demand was also seen from retailers planning to open pop-up stores during the upcoming Expo. With availability of street-level stores becoming tighter, some landlords are planning to take advantage of the expiration of their existing tenant's contract and replace them with a retailer with higher sales performance. High street rents stood at JPY 204,000 per tsubo per month as of quarter’s end, representing an increase of 5.7% q-o-q and 3.0% higher than the level in the quarter immediately prior to the onset of the pandemic. In Umeda, several premises received enquiries from food and beverage retailers this quarter. Demand was also seen from a wide range of sectors including household goods, an insurance agency, and second-hand goods. High street rents stood at JPY 114,000 per tsubo per month, a significant increase of 12.3% compared to the previous quarter. While leasing activity is returning to pre-pandemic levels, thanks in part to an increase in the number of inbound tourists, there is a lack of space to meet demand for new store openings, leading to a rise in market rents. Kyoto high street vacancy rate in Q3 2023 fell 2.7 pp q-o-q to 5.3%. With availability in existing premises decreasing further over the quarter, demand is now shifting to properties slated for completion in 2024 and 2025. This quarter saw watch brands, retailers focused on inbound demand, apparel, and outdoor stores open new stores. Other demand for new openings came from drug stores, furniture, women's fashion, and accessory shops. High street rents reached JPY 93,000 per tsubo per month, an increase of 9.4% compared to the previous quarter. Kobe high street vacancy rate in Q3 2023 fell 1.2 pp q-o-q to 4.0%. During the quarter, drug stores, mobile shops, and high-end furniture brands unveiled new stores in Q3 2023. Leasing demand was also witnessed from sectors such as capsule toy shops, casual fashion, and overseas patisseries. High street rents for the quarter stood at JPY 99,500 per tsubo per month, a significant increase of 23.6% compared to Q2 2023, and 4.7% higher than the level immediately prior to the onset of the pandemic.
Figure 9: High street vacancy rate & high street rent in Shinsaibashi (JPY/tsubo)
15%
205,000
10%
185,000
5%
165,000
0%
145,000 Q3 2022 Vacancy Rate
Q4 2022
Q1 2023
Q2 2023
Q3 2023
High Street Rent
Source: CBRE, Q3 2023.
Figure 10: High street vacancy rate & high street rent in Kyoto (JPY/tsubo)
9%
95,000
6%
85,000
3%
75,000
0%
65,000 Q3 2022 Vacancy Rate
Q4 2022
Q1 2023
Q2 2023
Q3 2023
High Street Rent
Source: CBRE, Q3 2023.
Figure 11: High street vacancy rate & high street rent in Kobe (JPY/tsubo)
9%
105,000
6%
95,000
3%
85,000
0%
75,000 Q3 2022
Vacancy Rate
Q4 2022
High Street Rent
Q1 2023
Q2 2023
Q3 2023
Source: CBRE, Q3 2023.
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CBRE RESEARCH
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MarketView | JAPAN RETAIL | Q3 2023
Nagoya: Sakae
Fukuoka: Tenjin
Rents remain unchanged for fourth consecutive quarter despite tightening supply
Demand for store openings seen from wide range of sectors, but rents remain flat
Sakae high street vacancy rate in Q3 2023 recorded fourth consecutive quarter of 0.0%. Availability remained extremely low, resulting in very few leasing transactions. New openings included a foreign sports brand, while other highlights saw an apparel group lodge an application for a lease in another property. Demand for new store openings was seen from a wide range of sectors, including drug stores, golf manufacturers, watch brands, outdoor stores, food and beverage, accessories, and second-hand goods. One cosmetics brand was seen to be considering opening a store in a property where a different cosmetic brand has decided to close, while a luxury brand was seen to be planning to open a store in a newly developed property. High street rents were unchanged for a fourth consecutive quarter, at JPY 71,000 per tsubo per month. Although demand is high and space is limited, retailers in the area remain conservative regarding their sales and cost assumptions, resulting in a lack of upward momentum to raise market rents.
Figure 12: High street vacancy rate & high street rent in Sakae
Figure 13: High street vacancy rate & high street rent in Tenjin
6%
75,000
6%
60,000
4%
70,000
4%
55,000
2%
65,000
2%
50,000
60,000
0%
0% Q3 2022
Q4 2022
High Street Rent Vacancy Rate
Source: CBRE, Q3 2023.
5
Tenjin high street vacancy rate in Q3 2023 was unchanged q-o-q at 2.5%. Tenjin saw new openings by eyewear brands, mobile shops, capsule toy shops, and cafes. Leasing demand was seen from a variety of sectors including cosmetics, second-hand, domestic and overseas apparel brands, and watch brands. CBRE also observed cases of fashion brands considering relocating from shopping centres and/or department stores to street-level stores. Although rents on Tenjin’s high street increased in both Q1 2023 and Q2 2023 and have now risen 19.4% from the bottom of the market seen at the height of the pandemic, they remained unchanged this quarter at JPY 55,500 per tsubo per month.
CBRE RESEARCH
Q1 2023
Vacancy Rate High Street Rent
Q2 2023
Q3 2023
45,000 Q3 2022 Vacancy HighRate Street Rent
Q4 2022
Q1 2023
Q2 2023
Q3 2023
High Street Rent Vacancy Rate
Source: CBRE, Q3 2023.
© 2023 CBRE, INC.
MarketView | JAPAN RETAIL | Q3 2023
Figure 14: Vacancy Rate
Figure 15: High Street Rent (JPY / Tsubo / Month)
Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023
Q4 2022
Q1 2023
Q2 2023
Q3 2023
Ginza
241,500
250,700
257,600
257,600
260,600
Omotesando/Harajuku
183,800
188,800
188,800
188,800
198,800
Shinjuku
170,000
170,000
170,000
170,000
170,000
Shibuya
127,800
127,800
127,800
127,800
129,400
Shinsaibashi
152,000
152,000
164,000
193,000
204,000
Umeda
94,500
96,500
101,500
101,500
114,000
Kyoto
68,500
71,000
80,000
85,000
93,000
Kobe
80,000
80,000
80,500
80,500
99,500
Ginza
7.7%
7.6%
6.2%
6.7%
3.5%
Omotesando/Harajuku
4.9%
5.6%
6.7%
7.2%
5.7%
Shinjuku
6.6%
6.6%
6.6%
6.7%
6.7%
Shibuya
3.5%
6.9%
5.9%
2.9%
4.1%
Shinsaibashi
14.0%
7.6%
4.6%
3.4%
2.8%
Kyoto
6.8%
6.6%
7.8%
8.0%
5.3%
Kobe
7.5%
6.0%
5.2%
5.2%
4.0%
Nagoya
Sakae
0.4%
0.0%
0.0%
0.0%
0.0%
Nagoya
Sakae
70,000
71,000
71,000
71,000
71,000
Fukuoka
Tenjin
4.5%
2.5%
3.0%
2.5%
2.5%
Fukuoka
Tenjin
46,500
46,500
47,500
55,500
55,500
Q3 2022
Q4 2022
Q1 2023
Q2 2023
Q3 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
300,000
350,000
350,000
Umeda
130,000
130,000
130,000
130,000
180,000
Kyoto
100,000
100,000
110,000
120,000
135,000
Kobe
150,000
150,000
150,000
150,000
200,000
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
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. Source: CBRE, Q3 2023.
Source: CBRE, Q3 2023.
Figure 16: Area Traffic Volume (Q3 2023)
Figure 17: Prime Rent (JPY / Tsubo / Month)
Ginza
Tokyo
Omotesando/Harajuku Shinjuku Shibuya Shinsaibashi
Kansai
Kyoto Kobe
Nagoya
Sakae
Fukuoka
Tenjin
Q-o-Q
Y-o-Y
－15%
－13%
－13%
－19%
－8%
－11%
－11%
－10%
－3%
－12%
－6%
－10%
－11%
CBRE RESEARCH
Tokyo
－16% －12%
Kansai
－18%
－12%
－10%
Source: Giken Shoji International “KDDI Location Analyzer*” CBRE, Q3 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
Q3 2022
Source: CBRE, Q3 2023.
© 2023 CBRE, INC.
MarketView | JAPAN RETAIL | Q3 2023
Terms and Definitions
Vacancy Rate Subject Area Prime rent/ High Street Rent Area Traffic Volume Term
Survey method
Quarterly
Tokyo
Kanazawa
• Vacancy rate cover all units for lease, including those on the ground floor in the high street areas assigned by CBRE • Tokyo - Ginza :149 properties, Omotesando/Harajuku: 240properties, Shinjuku: 61 properties, Shibuya: 66 properties • Kansai - Shinsaibashi: 184 properties, Kyoto: 178 properties, Kobe: 105 properties • Nagoya - Sakae: 53 properties • Fukuoka - Tenjin: 202 properties
Meiji Yasuda Seimei Building 2-1-1 Marunouchi, Chiyoda-ku, Tokyo
Aube II Building 5-177 Kuratsuki, Kanazawa-shi, Ishikawa
• 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.
Grand Front Osaka 4-20, Ofuka-cho, Kita-ku, Osaka-shi, Osaka
• The retail market areas assigned by CBRE Q1) End of March Q2) End of June Q3) End of September Q4) End of December
Vacancy Rate
• Physically available for tenants at the time of survey
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
High Street Rent
• 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
Area Traffic Volume
Contacts
Hiroshi Okubo Head of Research
Osaka
• y-o-y and q-o-q % changes of traffic volume in the subject area
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
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
Yokohama Yokohama ST Building 1-11-15 Kitasaiwai, Nishi-ku, Yokohama-shi, Kanagawa
hiroshi.okubo@cbre.com
© Copyright 2023. 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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