CBRE released today a report on leasing market trends and forecasts for large multi-tenant logistics properties in the Tokyo Metropolitan Area and the Kinki Region for the first quarter of 2013.
Hot Topics
* The major logistics markets in Japan will likely continue to see favorable demand from major tenants such as internet retail operators, with growing demand expected from manufacturers and other retailers.
* A large quantity of new supply is expected in the Tokyo Metropolitan Area over the coming year, and with almost half of the new supply in 2013 being pre-leased, concerns over the vacancy rate increasing are muted.
* Going forward, rents are expected to be solid, with expectations of rents rising with the improved economy supported by the new economic stimulus package introduced with Abenomics.
The vacancy rate of logistics properties in the Tokyo Metropolitan Area (TMA) displayed?further improvement in the first quarter of 2013, with the vacancy rate of large?multi-tenant logistics properties (LMTs) in the TMA dropping 0.9 points?quarter-on-quarter to 2.8% in the first quarter of 2013. This is the lowest vacancy rate?recorded since 2004. The vacancy rate of LMTs that were more than one year old dropped?by 0.7 points q-o-q to 1.8% in the first quarter, the second consecutive quarter of declining?vacancies and the lowest level seen since 2004.
The limited available space has been absorbed by existing tenants, which has contributed?to the lower vacancy rates. In the Kinki Region, the average vacancy rate of LMTs remained?at 1.5% at the end of the first quarter, following a significant decline of 7.3 points in the?third and fourth quarters of 2012. LMTs that were more than one year old continued to be?fully occupied.
With the steep depreciation of the Japanese yen as well as the soaring Japanese stock?market, prospects for corporate earnings and personal consumption are becoming?brighter, and the new economic stimulus package sparked by Abenomics will enhance the?market in the medium- to long-term.
Future prospects for the logistics leasing market are also bright. The major driver will?continue to be the growth in internet retailing. Major retail operators are also planning to?develop their own new, large distribution facilities, and this demand is expected to trickle?down to medium and small retailers as well.
In the fiscal year starting April 2013, a large quantity of new supply of LMT facilities is?expected in the TMA. The average new supply over the last five years was 146,000 tsubo,?while the new supply in between the second quarter of 2013 and the first quarter of 2014?is scheduled to be approximately 2.7 times that. Nevertheless, pre-leasing has progressed?well, including several contracts for large space. While such a large quantity of supply is?likely to raise vacancy rates, the increment appears limited.
In 2014, new supply in TMA will likely decrease to a noticeably lesser level than the?historical average. Taking development duration into account, it is unlikely that additional?large projects with mid-2014 completions will be seen, and vacancy rates are expected to?improve.
(For further details of market trends and forecasts as well as detailed market data by area,?please review the Japan Industrial and Logistics MarketView Q1 2013 which is scheduled?for release on April 30 and will also be published on our website: http://www.cbre.co.jp )
Vacancy rate computation standards
?Subject regions: Tokyo Metropolitan Area / Metropolitan Tokyo, Chiba prefecture, Saitama prefecture,
?Subject properties: Properties with floor area of 10,000 tsubo or more
In principle, properties planned/designed under the presumption of multi-tenant use at time of?development
-Tokyo Metropolitan Area: 58 buildings
?Vacancy Rate computed at end of months: (1) March, (2) June, (3) September, (4) December
Vacancies are those that are ready to receive tenants at time of survey (newly built properties are those on?which construction is complete).
Kanagawa prefecture, Kinki Region / Osaka prefecture, Hyogo prefecture
DISCLAIMER: Neither CBRE nor its affiliated companies make any warranties or claims on the implied?accuracy of the information contained herein.
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