Overall Market Status: Vacancy Rates Declining and Rent Growth
In the third quarter of 2025, the Japanese office market demonstrated a clear downward trend in vacancy rates, while rents reached record highs. This indicates a strong recovery in demand for office space, particularly noticeable in regional markets, driven by strong take-up in key cities such as Yokohama, Fukuoka, and Tokyo. CBRE's data analysis highlights the overall improvement, with half of the major cities surveyed reporting lower vacancy rates.
Regional Growth Leaders: Yokohama and Fukuoka
The most significant improvement in office vacancy was recorded in Yokohama, where the rate fell by a full percentage point to 4.3%. This was a result of both companies exiting their existing properties and robust demand for new and expanded office space. Fukuoka follows Yokohama, where the vacancy rate decreased by 0.6 points to 4.0%. This decline was driven by companies relocating to larger premises, as well as temporary tenant relocation due to building renovations. CBRE believes these trends indicate stable underlying demand for office space.
Factors Affecting Vacancy Growth: New Supply
Despite the overall positive trend, a number of cities saw an increase in vacancy rates, primarily due to new properties entering the market. In Sapporo, for example, the addition of approximately 3,000 tsubo of new space led to a slight increase in the vacancy rate of 0.2 points, although demand for existing prime space remained strong. A similar situation developed in Kanazawa, where new supply, equivalent to 3% of the existing inventory, exceeded demand, causing the vacancy rate to increase by 1.5 points. In Kyoto, despite the availability of fully leased new properties, downsizing and consolidation in other areas led to a 0.8-point increase in the overall vacancy rate.
Analysis of the latest data shows that the office market across Japan is experiencing significant rent growth. Nearly all cities surveyed are seeing upward trends, indicating strong and sustained tenant demand.
Nationwide growth and record highs:
Nine out of ten cities surveyed recorded office rent growth. The only exception was Kanazawa, which saw a slight decline. The most significant increases, exceeding 1% compared to the previous quarter, were recorded in Yokohama, Sendai, and Takamatsu. For Yokohama and Sendai, this was the first such increase since the beginning of 2020 and the end of 2019, respectively, highlighting the scale of the current trend.
In the third quarter of 2025, the Japanese office market demonstrated a clear downward trend in vacancy rates, while rents reached record highs. This indicates a strong recovery in demand for office space, particularly noticeable in regional markets, driven by strong take-up in key cities such as Yokohama, Fukuoka, and Tokyo. CBRE's data analysis highlights the overall improvement, with half of the major cities surveyed reporting lower vacancy rates.
Regional Growth Leaders: Yokohama and Fukuoka
The most significant improvement in office vacancy was recorded in Yokohama, where the rate fell by a full percentage point to 4.3%. This was a result of both companies exiting their existing properties and robust demand for new and expanded office space. Fukuoka follows Yokohama, where the vacancy rate decreased by 0.6 points to 4.0%. This decline was driven by companies relocating to larger premises, as well as temporary tenant relocation due to building renovations. CBRE believes these trends indicate stable underlying demand for office space.
Factors Affecting Vacancy Growth: New Supply
Despite the overall positive trend, a number of cities saw an increase in vacancy rates, primarily due to new properties entering the market. In Sapporo, for example, the addition of approximately 3,000 tsubo of new space led to a slight increase in the vacancy rate of 0.2 points, although demand for existing prime space remained strong. A similar situation developed in Kanazawa, where new supply, equivalent to 3% of the existing inventory, exceeded demand, causing the vacancy rate to increase by 1.5 points. In Kyoto, despite the availability of fully leased new properties, downsizing and consolidation in other areas led to a 0.8-point increase in the overall vacancy rate.
Analysis of the latest data shows that the office market across Japan is experiencing significant rent growth. Nearly all cities surveyed are seeing upward trends, indicating strong and sustained tenant demand.
Nationwide growth and record highs:
Nine out of ten cities surveyed recorded office rent growth. The only exception was Kanazawa, which saw a slight decline. The most significant increases, exceeding 1% compared to the previous quarter, were recorded in Yokohama, Sendai, and Takamatsu. For Yokohama and Sendai, this was the first such increase since the beginning of 2020 and the end of 2019, respectively, highlighting the scale of the current trend.
Growth drivers in key cities:
In Yokohama, landlords increased rents in areas around the train station and Kannai district. In Sendai, the growth was driven by strong demand for new, high-quality buildings with minimal vacancy rates. According to CBRE, "virtually no properties reported rent declines nationwide." Meanwhile, cities such as Sapporo, Saitama, and Hiroshima set new rent records.
Tokyo: Tight Market and 18-Year High:
Tokyo's office market remains under pressure, reflected in rapidly rising rents. The vacancy rate for all categories fell to 2.1%, with Category A vacancy rates reaching an impressive 1.0%. Strong demand for a limited supply of large-scale space led to a 3.4% quarter-on-quarter increase in Category A rents per square meter, reaching approximately $1,075. This figure not only surpasses the pre-pandemic peak of 2020 ($1,055) but also represents the sharpest increase since 2007. CBRE emphasizes that "Tokyo's prime space is now commanding the highest rents in nearly two decades," and competition for prime buildings in the capital's central districts remains extremely intense.
Osaka and Nagoya Demonstrate Unprecedented Office Market Growth
The Japanese metropolises of Osaka and Nagoya have set new office market records, recording historically low vacancy rates and record rent increases. These trends indicate strong and sustained demand for office space in both cities.
Osaka: Record Occupancy and Rent Growth
In Osaka, the office vacancy rate decreased by 0.3 percentage points, reaching 2.3%. This was made possible by robust demand for existing office buildings. Average rent per tsubo (unit of floor space) increased by 1.4%, reaching approximately US$400. This is a historical high for the city. Landlords of Class A offices in the Umeda central business district and surrounding areas actively raised rents, reflecting strong demand for high-quality office space.
Nagoya: Unprecedented Low Vacancy and Rent Rise
Nagoya also posted impressive results. The vacancy rate for all space categories decreased by 0.7 percentage points to 2.4%. This is the lowest level since mid-2021. Rents for Class A offices increased by 1.4%, reaching approximately US$765. Rents for all office categories increased by 0.8%, reaching US$390, also a record high since CBRE began its research.
Market Overview: Stability and Resilience
CBRE analysts note that the Japanese office market continues to demonstrate "surprising stability." Several key factors contribute to this:
Strong tenant demand: Companies are actively seeking office space to provide comfortable working conditions for their employees and support business growth.
Limited speculative construction: Developers are exercising caution, focusing on building properties that meet real market needs, preventing oversupply.
Expansion-driven relocations: Many companies are expanding their workforces and, consequently, require more office space, stimulating demand.
Despite a possible temporary increase in vacancy rates in some cities due to new building completions, the overall fundamentals of the Japanese office market will remain stable until 2026. This is especially true for large metropolitan areas like Tokyo, where demand remains high.
In Yokohama, landlords increased rents in areas around the train station and Kannai district. In Sendai, the growth was driven by strong demand for new, high-quality buildings with minimal vacancy rates. According to CBRE, "virtually no properties reported rent declines nationwide." Meanwhile, cities such as Sapporo, Saitama, and Hiroshima set new rent records.
Tokyo: Tight Market and 18-Year High:
Tokyo's office market remains under pressure, reflected in rapidly rising rents. The vacancy rate for all categories fell to 2.1%, with Category A vacancy rates reaching an impressive 1.0%. Strong demand for a limited supply of large-scale space led to a 3.4% quarter-on-quarter increase in Category A rents per square meter, reaching approximately $1,075. This figure not only surpasses the pre-pandemic peak of 2020 ($1,055) but also represents the sharpest increase since 2007. CBRE emphasizes that "Tokyo's prime space is now commanding the highest rents in nearly two decades," and competition for prime buildings in the capital's central districts remains extremely intense.
Osaka and Nagoya Demonstrate Unprecedented Office Market Growth
The Japanese metropolises of Osaka and Nagoya have set new office market records, recording historically low vacancy rates and record rent increases. These trends indicate strong and sustained demand for office space in both cities.
Osaka: Record Occupancy and Rent Growth
In Osaka, the office vacancy rate decreased by 0.3 percentage points, reaching 2.3%. This was made possible by robust demand for existing office buildings. Average rent per tsubo (unit of floor space) increased by 1.4%, reaching approximately US$400. This is a historical high for the city. Landlords of Class A offices in the Umeda central business district and surrounding areas actively raised rents, reflecting strong demand for high-quality office space.
Nagoya: Unprecedented Low Vacancy and Rent Rise
Nagoya also posted impressive results. The vacancy rate for all space categories decreased by 0.7 percentage points to 2.4%. This is the lowest level since mid-2021. Rents for Class A offices increased by 1.4%, reaching approximately US$765. Rents for all office categories increased by 0.8%, reaching US$390, also a record high since CBRE began its research.
Market Overview: Stability and Resilience
CBRE analysts note that the Japanese office market continues to demonstrate "surprising stability." Several key factors contribute to this:
Strong tenant demand: Companies are actively seeking office space to provide comfortable working conditions for their employees and support business growth.
Limited speculative construction: Developers are exercising caution, focusing on building properties that meet real market needs, preventing oversupply.
Expansion-driven relocations: Many companies are expanding their workforces and, consequently, require more office space, stimulating demand.
Despite a possible temporary increase in vacancy rates in some cities due to new building completions, the overall fundamentals of the Japanese office market will remain stable until 2026. This is especially true for large metropolitan areas like Tokyo, where demand remains high.