Rents for investment-grade offices in Osaka surged by 5.5% in the first half of 2025, hitting JPY24,000 per tsubo, according to a recent report from Savills. This spike underscores the robust demand for premium office space, particularly in newly constructed properties where rental figures have leapt from above JPY30,000 to even exceed JPY40,000 per tsubo, with the pinnacle reaching a remarkable JPY43,000 per tsubo.
All-Grade Rents on the Rise
Overall, all-grade rents increased by 0.8% quarter-on-quarter, settling at JPY12,200 per tsubo. The Umeda submarket stood out with the most considerable growth, climbing by 1.7% quarter-on-quarter, while Minami-Mori experienced a modest decline of 0.7%. The remaining submarkets, however, continued to show promising upward trends in rental rates.
Vacancy Rates Tighten as Demand Peaks
The office market absorbed significant new supply in 2024, leading to tighter investment-grade vacancy rates, which dropped by 1.3 percentage points to 2.6% in the first half of 2025. Notably, Yodoyabashi-Honmachi is likely to encounter temporary disruptions due to an influx of substantial new office developments slated for 2025. Yet, experts anticipate this submarket will become a hotbed for tenants in search of high-quality spaces, as it prepares to welcome premium office developments that will help maintain robust leasing activities well into 2026.
The all-grade office vacancy rates also saw improvement, decreasing by 0.5 percentage points to 3.8%. The Shin-Osaka submarket recorded the most significant enhancement, with vacancy tightening by 1.5 percentage points to an enticing 2.7%, the lowest level seen since just before the pandemic, propelled by strong leasing activity.
Questions & Answers
What factors are driving the increase in rental rates for investment-grade offices in Osaka?
The increase is primarily driven by strong demand for high-grade office spaces, particularly in newly constructed properties where rental prices are rapidly rising.
How did the new office supply in 2024 affect the vacancy rates in Osaka?
The new office supply was absorbed well by the market, leading to tighter vacancy rates, especially for investment-grade offices which saw a decrease.
Which submarket in Osaka recorded the most notable rental growth?
The Umeda submarket experienced the most significant rental increase, climbing by 1.7% quarter-on-quarter, showcasing its attractiveness in the current market.
AloJapan.com